ALLANA MANAGEMENT JOURNAL OF RESEARCHaimspune.org/web-journals/ALLANA MANAGEMENT JOURNAL... · Dr. G. Ramasundaram, ... Tamilnadu, India Dr. B. Aiswarya, Professor, Dept. Of ... BBA

“Information search : an empirical study among retail banking customers in India”

Dr. G. Ramasundaram, Professor, St. Joseph's College Of Engineering, Chennai, Tamilnadu, India

Dr. B. Aiswarya, Professor, Dept. Of Management Studies Sathyabama University, Chennai, Tamil Nadu,

India

“An empirical study on capital structure And its impact on bank's performance : with special reference

to SBI”

Jignesh B. Bhatt, I/c Principal, Assistant Professor, Takshashila Institute of Management, BBA Department

Jignesh R. Vaja, HOD, Assistant Professor, Sarvoday College of Management & Tech. (MBA), Limbdi, Gujarat

Hetal B. Panchal, Assistant Professor, C. U. Shah College of Eng. & Tech., Gujarat

“Micro finance - opportunities & challenges in India”

Dr. Sanjay Kaptan, Professor & Head, Department of Commerce & Research Centre, University of Pune

“Training effectiveness from HRD manager’s perspective”

Dr. Netra Neelam, Assistant Professor, Symbiosis International University, Symbiosis Centre for

Management Studies, Pune

“Developing executive (Managerial) competencies”

Dr. Tayyab S. Shaikh, HR & Training Consultant, Formerly, Executive Director, Personnel & Executive

Director, National Institute of Aviation Management & Research, Airports Authority of India, New Delhi

“Managing family business - {a critical study of six family businesses}

Prof. S. D. Bagade, Professor, AIMS, Pune

“Harnessing the power of social media in higher education institutions”

Prof. M. M. Junaid F., Assistant Professor, AIMS, Pune

Dr. Manik Kadam, Research Guide, AIMS, Pune

“A study of Moodle : open source Learning Management System with reference to it’s application in

test / exam management”

Prof. Sheetal Uplenchwar, Assistant Professor, AIMS, Pune

“Changes in the focus of parameter of market segmentation in Automobile Industries in India”

Ali Asghar Tabavar, Ph. D., Researcher, Pune University, India

ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 001

FINANCE &

BANKING

MANAGEMENT

HUMAN

RESOURCES

MANAGEMENT

GENERAL

MANAGEMENT

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21

25

29

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ALLANA MANAGEMENT JOURNAL OF RESEARCHCONTENTS

JULY - DECEMBER, 2013

CHIEF EDITOR

DR. (PROF). R. GANESAN

DIRECTOR, AIMS, PUNE

ADVISOR

DR. A. B. RAO

SENIOR RESEARCH GUIDE & MANAGEMENT CONSULTANT

HEAD, RESEARCH CENTRE, AIMS, PUNE

EDITORS

DR. ASHRAF RIZVI

PROFESSOR, IIM, INDORE

DR. (PROF). ROSHAN KAZI

PROFESSOR, AIMS, PUNE

DR. (MRS.) SURYA RAMDAS

DIRECTOR, II BM, PUNEe

ASST. EDITORS

PROF. ASHFAQUE AHMED PINITOD

ASST. PROFESSOR, UNIVERSITY OF YAMBU, KINGDOM OF SAUDI, ARABIA

PROF. S. D. BAGADE

ASST. PROFESSOR, AIMS, PUNE

EDITORIAL BOARD


t present research in Management and allied Disciplines is more analytic

Aand technology- oriented with precision, in content, and based on logical

reasoning, consistence and accuracy. Further originality in research is a

resultant of new ideas, their expression though appropriate formulation, thereby

paving the way for new insights into progressive research.

The variety and content in the articles of this issue, would provide ample scope to all

those interested readers to reflect and review.

Suggestions from readers are welcome. The Editorial committee would thankfully

receive the same.

EDITORIAL


DR. (PROF). R. GANESAN

CHIEF EDITOR

ver since the entry of new private sector banks in the wake of economic

Ereforms in 1991, the competition has become very tough for getting a pie in

retail banking segment in India. In order to attract consumers of retail

banking, a competent bank has to frame a strategy which warrant understanding of

consumer buying behavior especially information search phase of consumer

behavior. Hence, this study has attempted to identify the source of information and

analyze the level of usefulness thereof in selection of bank by collecting information

from 895 retail credit customers. The sample size covered all spectrums of customer

profiles such as age, income, education, and gender. Using ANOVA and independent T

test, it has found the significant differences among various segments in terms of

perception on level of usefulness of different information sources.

KEYWORDS

Retail banking, advertisement, family and friends, financial advisor, pamphlets,

previous dealings and shopping around.

Dr. G. Ramasundaram

Professor,

St. Joseph's College Of Engineering,

Chennai, Tamilnadu, India

Dr. B. Aiswarya

Professor,

Dept. Of Management Studies

Sathyabama University,

Chennai, Tamil Nadu, India

ABSTRACT

“INFORMATION SEARCH : AN EMPIRICAL STUDY AMONG

RETAIL BANKING CUSTOMERS IN INDIA”


13

inancing decisions are one of the most critical areas for finance managers. It

Fhas direct impact on capital structure and financial performance of the

companies. It has always been an area of interest for researchers to

understand the relationship between capital structure and financial performance of

the company. This paper analyses the relation between capital structure decision &

financial performance of SBI using data from the financial year 2008 to 2012. The

data were analysed on the basis of correlation between profitability ratio i.e. return

on long term fund, return on net worth, return on assets, & EPS & capital structure

ratios i.e. total debt to owners fund ratio. Results of our study demonstrated that

capital structure influences financial performance.

KEYWORDS

Capital structure, performance, SBI.

Jignesh B. Bhatt

I/c Principal,

Assistant Professor,

Takshashila Institute of Management,

BBA Department

Jignesh R. Vaja

HOD, Assistant Professor,

Sarvoday College of Management &

Tech. (MBA), Limbdi, Gujarat

Hetal B. Panchal


C. U. Shah College of Eng. & Tech.

Gujarat

ABSTRACT

“AN EMPIRICAL STUDY ON CAPITAL STRUCTURE AND ITS IMPACT

ON BANK'S PERFORMANCE : WITH SPECIAL REFERENCE TO SBI”


21

he present paper deals with a few important issues related with possibilities

Tof utilization of Micro Finance as a tool of bringing in developmental change.

The paper discusses certain key issues associated with poverty alleviation &

women empowerment. It also proposes an argument as to how Micro Finance

alleviates the socio-economic status of women & helps in removing disparities

between rich and poor. The paper also explains the nature of Micro Finance as an

economic system supporting the neglected sections of society. The author argues

that there are certain issues and hindrances affecting development of Micro Finance

& all these issues need to be rightly addressed so that Micro Finance becomes a viable

solution for bringing about socio-economic change in India.

KEYWORDS

1. Micro Finance

2. Self Help Groups

3. Constituents of Micro Finance

4. Structures and systems for development of Micro Finance

Dr. Sanjay Kaptan

Professor & Head,

Department of Commerce

& Research Centre,

University of Pune

ABSTRACT

“MICRO FINANCE - OPPORTUNITIES & CHALLENGES IN INDIA”


25

ost of the times training functions in the organizations are criticized to

Mbe ineffective due to their inability to deliver desired results. In many

cases training functions are viewed as poor reflections of Training Needs

Assessment, lack of support from training managers, insufficient budget and failure

towards transfer of knowledge and learned capabilities to transform into workplace

requirements. This study aims at understanding such issues and the perspective

towards training effectiveness from the point of view of HRD managers.

The data was collected from HRD managers of different Manufacturing and

Information Technology industries by using a questionnaire. All these industries had a

turnover of more than 50 crores.

Chi Square analysis was used to interpret the results of the data. The results of the

analysis showed a positive rejoinder from the side of the HRD managers with respect

to the training and development programs and functions carried on in the

organizations.

KEYWORDS

HRD Managers, Training Effectiveness, Training needs identification, Transfer of

Training.

Dr. Netra Neelam

Assistant Professor

Symbiosis International University,

Symbiosis Centre for Management

Studies, Pune

ABSTRACT

“TRAINING EFFECTIVENESS FROM HRD MANAGER’S PERSPECTIVE”


29

xecutives (and managers) have capacity to influence performance of an

Eorganization, they are part of. Organizations, large & small, are integral

part of modern society and effective organizations can make modern

society economically productivity and socially viable. Organization also serves as a

tool to accomplish individual's career goals. It is therefore imperative that

executives / managers are effective in their given assignment. The effectiveness can

be learned by acquiring / developing competencies such as: requisite knowledge,

skills and right attitude towards the organization and the work. Requirement of

competencies may vary at different levels of management. In this article

competencies required at junior / base level executive / managerial positions are

discussed.

KEYWORDS

Executive, Manager, Effectiveness, Organization, Society, Managerial Competencies.

Dr. Tayyab S. Shaikh

HR & Training Consultant

Formerly, Executive Director

Personnel & Executive Director,

National Institute of Aviation

Management & Research,

Airports Authority of India,

New Delhi

ABSTRACT

“DEVELOPING EXECUTIVE (MANAGERIAL) COMPETENCIES”


34

hen family members work together, emotions may interfere with

Wbusiness decisions. Conflicts may arise as relatives see the business

from different perspectives. Those who are silent partners are likely to

judge capital expenditures, growth and other critical matters primarily. Those

engaged in daily operations are more likely to be concerned about transactions and

personnel matters. Obviously, there is potential for conflict. As there is a gap in

between expectations and performance, in some family businesses daily operations

are hampered by conflict; in others, the challenge.

A clear chain of command -- lines of authority -- for decision making. ! A clear plan to

accomplish goals and provide for orderly succession. ! Good communication among

family members and with non-family employees. These factors are important in a

family business because of the strong emotions that can arise and the confusion that

can occur in their absence. Rights and responsibilities are different at home than at

work, and it is imperative that family Language is personal, attitudes are subjective,

roles -- husband/wife, parent/child, family / relatives / in-laws -- are traditionally

defined.

Prof. S. D. Bagade

Professor,

AIMS, Pune

ABSTRACT

“MANAGING FAMILY BUSINESS -

{ A CRITICAL STUDY OF SIX FAMILY BUSINESSES }


39

ocial media differentiates from traditional media in many aspects such as

Squality reach, frequency, usability, immediacy and permanence. Corporates

have realized its power and taking benefit from, however educational

institutions are still reluctant in using it. We have conducted a survey of 100

respondent in order to get their view about use social media by educational institute.

Majority of the respondents were positive about it. We have also given Suggestions

how the different stake holders in an education institute can take benefit from this

powerful media(section 5).

KEYWORDS

Social media, Higher education, Stake holders, Benefits, Teaching, Recruitment,

Communication.

Prof. M. M. Junaid F.


AIMS, Pune

Dr. Manik Kadam

Research Guide,

AIMS, Pune

ABSTRACT

“HARNESSING THE POWER OF SOCIAL MEDIA IN

HIGHER EDUCATION INSTITUTIONS”


46

learning Management System (LMS) expands course management and adds

Amore functionality beyond creation, storage and retrieval of content like

registration; automating reporting, administration, assessment, course

management and tracking student progress etc. Most colleges and universities use

learning management system to support the delivery of course content.[1].

There are 86,268 registered sites using Moodle and total numbers of enrolled users

are . [2].73,095,190

In this work we present an overview of the Moodle's, Quiz Module. The purpose

behind using Quiz Module is to enhance the way of conducting traditional quiz.

This paper reports the relationship between the difficulty level and the

discrimination power of true/false-type multiple-choice questions (MCQs) in a multi

disciplinery paper for the MCA & MCM course.

KEYWORDS

Psychometric analysis, R Count, R%, Facility Index, Discriminative Index.

Prof. Sheetal Uplenchwar


AIMS, Pune.

ABSTRACT

“A STUDY OF MOODLE : OPEN SOURCE LEARNING MANAGEMENT SYSTEM

WITH REFERENCE TO IT’S APPLICATION IN TEST / EXAM MANAGEMENT”


53

he purpose of this study is to find out whether there is any change in the

Tfocus of parameter of segmentation in automobile industries in India or not,

in order to find out the current parameter of segmentation in automobile

industries In India researcher has gone through several published journal, books,

magazines and companies data. The result shows that the most important factor for

segmentation of automobile industries in India in the segmentation process is done

largely on the bases of the product type or the price range the product fits into.

Considering this Sample has been collected from 100 managers and 200 customers of

automobile industries in Pune, during the month of March 2012 to May 2012. The

result shows that there is a significant change in the focus of parameter of

segmentation in automobile industries in India. Based on the importance of

parameter of segmentation the results also found that there is a change in the focus

of parameter of segmentation between customers and managers of automobile

industries in India. Managerial implications of these findings are briefly discussed.

KEYWORDS

Segmentation, Automobile industries, Parameter of segmentation, India.

Ali Asghar Tabavar

Ph. D., Researcher,

Pune University, India

ABSTRACT

“CHANGES IN THE FOCUS OF PARAMETER OF MARKET

SEGMENTATION IN AUTOMOBILE INDUSTRIES IN INDIA”


58


INTRODUCTION

ndian retail banking has witnessed phenomenal growth ever since

Ithe economic reforms started in 1991. There are many reasons cited

by many authors for this growth which includes demographic

changes, flexible interest rates, competition among banks, and

profitability in retail banking business, less demand for credit from

industry, technological development and so on. Though the economy

encounters some challenges on account of global financial crisis and

recent European debt crisis, retail banking business appears to have

consistent growth. Hence, banks in India are applying strategies to

sustain and improve their share in this business. The basic of devising and

implementing strategy is to understand the borrowing behavior of Indian

retail consumers. Information search is one among stages of borrowing

behavior that is playing the vital role in evaluation and selection of a bank

for borrowing credit.

The buying behavior models developed by Howard and Sheth (1969) and

Engel, Blackwell and Miniard (1994) show that buying process of a

consumer consists of five stages Starting with problem recognition, the

consumer passes through the stages of information search, evaluation of

alternatives, purchase decision, and post purchase behavior. As this

model explains, the consumer borrowing process begins long before the

actual borrowing and has consequences long afterward.

An interested borrower who recognizes a need for retail credit will be

inclined to search for more information. The arousal would be

distinguished between two levels of arousal. At the milder search state of

heightened attention, a person simply becomes more receptive to

information about a bank. At the active information search level, a

“INFORMATION SEARCH:

AN EMPIRICAL STUDY AMONG RETAIL

BANKING CUSTOMERS IN INDIA”

DR. G. RAMASUNDARAM

PROFESSOR,

ST. JOSEPH'S COLLEGE OF ENGINEERING,

CHENNAI, TAMILNADU, INDIA

DR. B. AISWARYA

PROFESSOR,

DEPT. OF MANAGEMENT STUDIES

SATHYABAMA UNIVERSITY,

CHENNAI, TAMIL NADU, INDIA

FINANCE &

BANKING

MANAGEMENT


person surfs the Internet, talks with friends, and visits banks

to learn more about the product. Consumer information

sources include personal sources (family, friends, neighbors,

acquaintances), commercial sources (advertising, Web

sites, salespersons, dealers, packaging, displays), public

sources (mass media, consumer-rating organizations), and

experiential sources (handling, examining, using the

product). The borrower usually receives the most

information from commercial (marketer-dominated)

sources, although the most influential information comes

from personal sources. Through gathering information, the

consumer learns more and more about competing banks.

The individual borrower will come to know only a subset of

these banks (awareness set). Some of these banks will meet

initial borrowing criteria (consideration set). As the person

gathers more information, only a few banks will remain as

strong contenders (choice set). The person makes a final

choice from this set (Narayana and Marking, 1975; Desarbo

and Jedidi, 1995).

It makes it clear that a bank must strategize to get itself into

the prospect's awareness set, consideration set, and choice

set. The bank must also identify the other banks in the

borrower's choice set so that it can plan competitive

appeals. In addition, the bank should identify the consumer's

information sources and evaluate their relative importance

so it can prepare a range of effective communications for

the target market.

SOURCES OF INFORMATION

Most of the previous researchers defined information search

either explicitly or implicitly related to the specific

purchase under consideration (Beatty and Smith, 1987).

Information search behavior can be also classified as

internal or external (Beales et al., 1981). Internal

information search consists of consumers' retrieval of

memory or knowledge from previous search, experience

with products or passively acquired information during

normal regular activities. External information search

behavior comprises of consulting with friends, family

members, experts, sellers, reading books, magazines

articles, consumer ratings, advertising and direct

inspection. The other way of categorization of sources of

information includes direct experience, seller provided,

personal including family and friends and third party. Seller

provided information has been further divided into direct

from seller and advertisements.

In the survey conducted by the Mortgage Bankers Association

of America, most of the respondents cited the phone as their

favorite way to obtain information on mortgages; personal

contact was the second most cited source of information

followed by advertisement and real estate professionals;

experience was also cited as a source of information for

refinances (Lee and Cho, 2005).

Research in developed market economies constantly has

established that consumers derive product knowledge from

multiple sources of information which includes advertising

(Arndt, 1968; Coulter, Zaltman and Coulter, 2001; Hoch and

Ha, 1986), personal search (Alba and Hutchinson, 1987;

Beatty and Smith, 1987; Srinivasan and Ratchford, 1991),

influential others (Dichter, 1966; Feick and Price, 1987) and

product experience (Hoch and Ha, 1986; Kempf and Smith,

1998).

Oberlechner and Hocking (2004) found that wire services,

personal contacts, analysts, brokers, newspapers,

televisions are sources of information for foreign exchange

traders. Acquiring information also differs between

individualist and collectivistic cultures: in the individualistic

culture, people predominantly acquire information through

media sources; in the collectivistic culture, people are

perhaps to look for interpersonal sources of information (de

Mooij, 2004).

Findings of Elliot (1994) revealed that personal search (i. e.,

referrals, interpersonal) was the predominant information

source used while media search contributed best to the

formation of evoked sets. Besides, search determinants such

as age, service knowledge, perceived risk, purchase

involvement, and city size were successful in explaining

variation in external search effort.

A study conducted during economic transition in Hungary

(Coulter et al., 2009) indicated that the market information

variables explained in knowledge of consumer. Advertising

was an important predictor of consumer knowledge and

personal search was always important source of

information. However, brand experience was positively

related to knowledge in later transition and negatively

related in earlier transition. Conversely interpersonal

sources were not important in either period.


METHODOLOGY

As the number of people who borrowed credit is very large, sampling technique is applied to select the respondents for study.

Using mal intercept method, totally 1500 questionnaires after pilot survey among 50 respondents have been distributed to retail

credit customers of scheduled commercial banks in Chennai city during the period of 2010-11 but only 1264 have been received

after continuous follow-up. Among collected filled questionnaires, only 895 are in usable condition. The confidence level and

deviation considered in this study are 95 per cent and 3 per cent respectively. After adding 5 per cent contingency for non response

the required sample size is 883 which is less than actual sample size of 895.

The questionnaire consists of personal information like age, income, gender, amount of loan, type of loan etc., and information

sources including personal and other sources. The usefulness of each source of information is measured on five point scale starting

with not at all useful to highly useful. The reliability of the usefulness scale is tested with cronbach alpha (0.823). Based on pilot

survey and feed back of respondents, some of the sources of information are removed and some are clubbed with others. For

example, all types of advertisements are kept under one head.

SOURCES OF INFORMATION AND SEGMENTS OF RETAIL BANK

The borrowers of retail credit use various sources for getting information regarding details of suppliers of credit and features of

loans.

TABLE: 1. DESCRIPTIVE STATISTICS

Based on previous studies conducted in this area, the major sources of information are advertisement, financial advisor, family

and friends, previous dealings with the bankers and shopping around.

The table 1 witnesses that all sources of information invariably are mentioned by all respondents and have minimum of one and

maximum of four. It shows that all sources are useful and the degree of usefulness varies from respondent to respondent. The

conclusion elicited from the table 1 that by and large the information from family and friends are highly useful and has the least

variation. The next valuable source is advertisement of banks but the deviation is the highest among sources while the least

helpful source of information is shopping around. Nonetheless none of the sources is seemed to be of no use.

SOURCES OF INFORMATION AND SEGMENTATION BASED ON DEMOGRAPHIC FACTORS

Demographic segmentation such as age, income, education and gender has been considered for analyzing the sources of

information used by different segments and how it varies in terms of usefulness for selection of bank and loan. ANOVA and

independent T test have been applied to understand the difference between segments. The table 2 illustrates F value of each

source of information and its significant value for the segments namely age, income and education.


TABLE: 2. INFLUENCE OF AGE, INCOME AND EDUCATION ON USEFULNESS OF SOURCES OF INFORMATION

* Significant at 0.05

AGE AND SOURCES OF INFORMATION

With reference to the different age group of respondents, there are significant variations in the sources such as financial advisor,

family and friends, previous dealings and shopping around. Duncan post hoc method has been employed to understand the

differences.

TABLE: 3. HOMOGENEITY TABLE FOR USE OF FINANCIAL ADVISOR AND FAMILY/FRIENDS AMONG AGE GROUPS

The table 3 indicates that based on the level of usefulness of information from the source of financial advisor, the total

respondents are divided in to three subgroups. It is obvious from the data that the respondents in the age group of 31-50 have

found information given by financial advisor is more helpful than other age group. Conversely, respondents of above 50 and below

30 age groups have viewed this source as less useful source.

Regarding information from family and friends on banks and retail credit, the mean values in the table 3 confirms that there is

significant variation between different segments of respondents in terms of usefulness. Apart from respondents belonging to

above 50 age segment, all other respondents have meant this source as highly valuable source for selection of bank. Though mean

score is significantly less for the above 50 age segment, it is seemed to be useful to some extent.

TABLE: 4. HOMOGENEITY TABLE FOR USE OF PREVIOUS DEALINGS AND SHOPPED AROUND AMONG AGE GROUPS


As far as information derived from previous dealing is concerned, the worthiness of information is classified in to two categories

based on mean value. The first category contains only group of respondents below thirty age with the mean value of 2.07 that

explains relatively less value in terms of usefulness. It may be due to the fact that the young respondents would have had only few

previous dealings. Mean value of other age groups is significantly higher than the former.

For making out the difference in the worth of information collected by respondents through window shopping between age based

segments, the table 4 has been presented. The information from shopping around has been considered as less valuable by the

respondents with more than 50 age while, the respondents of 50 and less ages rate information of this source is of more use.

INCOME AND SOURCE OF INFORMATION

Respondents are classified based on their average monthly income level in to four categories such as respondents with the income

of below Rs10000, Rs10001-20000, Rs20001-30000, Rs30001- 40000 and above Rs40000. The result of ANOVA reveals that there is

significant difference between income segments in the case of financial advisor and previous dealings. Duncan post hoc analysis

has been used for further understanding on variation in the mean score of each source's usefulness.

TABLE: 5. HOMOGENEITY TABLE FOR USE OF FINANCIAL ADVISOR, SHOPPING AROUND AND PREVIOUS DEALINGS AMONG

INCOME SEGMENTS.

The Duncan post hoc table for information from financial advisor depicts that the difference in terms of value of information is

significant between Rs10000 and below and other segments. However, the variation is not found to be significant between

Rs20001-30000 and Rs30001-40000. It is also observed from the table 5 that the respondents of income less than Rs20000 find

information of this source is of less utility than the level of utility derived by respondents with more than Rs20000 income. But

none of the segments has rated this source as highly useful.

As far as information collected through previous dealings of respondents is concerned, there is significant difference between

different segments of income groups. The mean value in the table 5 ranges between 2 and 2.56 that show that the information is

helpful from a little extent to some extent. The information is more worth for Rs10001-30000 income group than the other two

segments appeared in the set 1 and set 2 of the above table. Conversely respondents with income of less than Rs10000 have found

this as significantly less useful.

The yet another source of information which has significant variation between different income segments is information collected

through shopping around. The highest mean score is given by the respondents of Rs40000 income segment which means that the

usefulness of information received by shopping around is higher. This is significantly different from the mean value of other

income segments. The first set reveals relatively less mean value. Among the various segments in the first set, respondents of

Rs20001-30000 income group regard information from shopped around as more useful than other income group in the first set.


EDUCATION LEVEL AND SOURCE OF INFORMATION

Respondent's education level has been classified as school level, degree, post graduate, professional and others. The ANOVA test

result reports that there is significant difference in mean value of all sources of information except financial advisor source and

shopping around source. Duncan post hoc analysis is used to ascertain how the usefulness of information varies.

TABLE: 6. HOMOGENEITY TABLE FOR USE OF ADVERTISEMENT, FAMILY/FRIENDS AND PREVIOUS DEALINGS AMONG

EDUCATION SEGMENTS.

Total segments have been stratified in to three subsets based on the mean value with reference to usefulness of advertisement.

The first set includes degree, post graduate and professional degree. The second set consists of school, professional degree, and

post graduate. And third set is made up of others.

Among the respondents of different educational levels, the degree holders have stated the information through advertisement is

less useful where as the respondents of other qualification have found more useful for patronizing particular bank for loan.

Besides, people with school education have opined the utility of advertisement above the level of degree holders but below the

level of other qualification people. It is evident from the above table that the significant difference is found between respondents

with degree and respondents with school education, school and other qualification.

Though it has been looked significant in ANOVA table, the Duncan post hoc table shows means of family and friends and previous

dealings in one set. However, there is substantial level of differences among the usefulness of sources of information in selection

of bank for availing loan. As per the table 6, customers of retail banking with qualification of school level have found the

information given by family members and friends more useful than that of others. It may be reason that people of this category

usually rely on their own circle for decision and may not be well aware of other sources available. Conversely customers who

qualified with professional degree have felt the information offered by family and friends source less utility in comparison with

the former. But it has been rated per se by all respondents irrespective of educational qualifications helpful to a great extent for

patronizing a bank. On the basis of differences, it can be grouped as professional degree, post graduate and others under one and

the remaining under other.

Of the sources of information depicting significant differences between the segments of various educational qualifications, the

last one that has the least F value is information with help of previous dealings. Previous dealing means here that information

gathered while respondents have availed some other or same type of services with the banks. This is possible only for the existing

customers of banks.

On an average the usefulness of information through this source falls between useful to some extent to useful to great extent. The

differences have been elicited from the table that the highest utility is drawn through previous dealings by professionally

qualified customers and the least by post graduate customers. Notwithstanding the differences among respondents with diverse


qualifications, none of the segments witnesses unhelpfulness of information drawn from previous experiences.

GENDER AND SOURCES OF INFORMATION

The retail customers consist of both male and female. For finding out the dissimilarities in terms of value of information from

different sources between male and female respondents, independent T test has been exercised. It is evident from the result that

almost all sources baring pamphlets and family and friends sources are nearly similar in terms of utility regardless of gender

difference.

TABLE: 8. T TEST TABLE FOR GENDER AND SOURCES OF INFORMATION

* Significant at 0.05

The significant difference has been found in the case of family and friends between male and female respondents. Both the

classes of respondents have stated that information provided by family members and friends are highly worth for selection of bank

but relatively female respondents have found more useful than male respondents that is noticed from the mean values in the

table. Nearly all female have assigned same weight to this source it is evident from the less standard deviation value. It is not

similar in the case of male respondents. The least difference has been discovered in the usefulness of previous dealings followed

by financial advisor.

CONCLUSION

It clearly reveals that by and large, the most useful source of information is family and friends followed by advertisement. The

least helpful source is shopping around. However, there are differences in average level of utility of sources of information

between segments. Segments below 50 years, school and degree segments, and female segment found to have more use in

information provided by family and friends.

Previous dealings with banks helped income segment relatively to a greater extent whereas the role of financial advisor is high in

the case of Rs 20000 to 30000 income segment, female segment and other qualification segment. By shopping around, all age

groups except above 50 and income groups more than Rs 40000 have obtained more useful information than others. These

inferences may be very helpful for the bankers while designing their promotion strategies for target consumers. Moreover, new

retail banking products are introduced frequently by the bankers to meet the needs of different segments of the market. Hence

they can prepare separate information dissemination formula for each product based on targeting segment for attaining optimum

resource utilization.


References

Arndt, Johan. A Test of the Two-Step Flow in Diffusion of a New Product,

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1.0 INTRODUCTION

Given the objective of maximization of shareholders' wealth, the

need for an optimum capital structure cannot be over

emphasised. In operational terms, every firm should try to

design such capital structure. But the determination of an optimum

capital structure is formidable task. It should be clearly understood that

identifying the precise percentage of debt that will maximise price of

shares is almost impossible, however to determine the proportion of debt

to use in the financial plan in conformity with the objective of maximizing

the share price. The key factors governing the capital stricter decision

are profitability & liquidity.

The growth in the Indian Banking Industry has been more qualitative than

quantitative and it is expected to remain the same in the coming years.

Based on the projections made in the India Vision 2020" prepared by the

Planning Commission and the Draft 10th Plan, the report forecasts that

the pace of expansion in the balance-sheets of banks is likely to

decelerate ". The total assets of all scheduled commercial banks by end-

March 2010 is estimated at 40,90,000 crores. That will comprise about 65

per cent of GDP at current market prices as compared to 67 per cent in

2002-03. Bank assets are expected to grow at an annual composite rate of

13.4 per cent during the rest of the decade as against the growth rate of

16.7 per cent that existed between 1994-95 and 2002-03. It is expected

that there will be large additions to the capital base and reserves on the

liability side.

The Indian Banking Industry can be categorized into non-scheduled banks

and scheduled banks. Scheduled banks constitute of commercial banks

and co-operative banks. There are about 67,000 branches of Scheduled

banks spread across India. As far as the present scenario is concerned the

“AN EMPIRICAL STUDY ON CAPITAL

STRUCTURE AND ITS IMPACT ON

BANK'S PERFORMANCE :

WITH SPECIAL REFERENCE TO SBI”

JIGNESH B. BHATT

I/C PRINCIPAL,

ASSISTANT PROFESSOR

TAKSHASHILA INSTITUTE OF

MANAGEMENT, BBA DEPARTMENT

JIGNESH R. VAJA

HOD, ASSISTANT PROFESSOR

SARVODAY COLLEGE OF MANAGEMENT &

TECH. (MBA), LIMBDI, GUJARAT

HETAL B. PANCHAL

ASSISTANT PROFESSOR

C.U.SHAH COLLEGE OF ENG. & TECH..

GUJARAT

FINANCE &

BANKING

MANAGEMENT


Banking Industry in India is going through a transitional

phase.

The Public Sector Banks (PSBs), which are the base of the

Banking sector in India account for more than 78 per cent of

the total banking industry assets. Unfortunately they are

burdened with excessive Non Performing assets (NPAs),

massive manpower and lack of modern technology. On the

other hand the Private Sector Banks are making tremendous

progress. They are leaders in Internet banking, mobile

banking, phone banking, ATMs. As far as foreign banks are

concerned they are likely to succeed in the Indian Banking

Industry.

The State Bank of India, the country's oldest Bank and a

premier in terms of balance sheet size, number of branches,

market capitalization and profits is today going through a

momentous phase of Change and Transformation – the two

hundred year old Public sector behemoth is today stirring out

of its Public Sector legacy and moving with an agility to give

the Private and Foreign Banks a run for their money.

The bank is entering into many new businesses with strategic

tie ups – Pension Funds, General Insurance, Custodial

Services, Private Equity, Mobile Banking, Point of Sale

Merchant Acquisition, Advisory Services, structured products

etc – each one of these initiatives having a huge potential for

growth.

2. OVERVIEW OF LITERATURE

The real debate on the capital structure was started after the

publication of the celebrated paper of Modigliani and Miller

(MM) in 1958. With the assumptions of perfect market and no

tax world MM proposed that the selection of debt-equity was

independent of the value of the firm. Modigliani and Miller

provide path and guidelines for the researchers to analyze

the financing patterns and later several hypotheses have

been put forward or considerable work has been done by

researchers to analyze the determinants of capital structure.

In 1963, Modigliani and Miller wrapped up the corporate tax

assumption and intended that the value of the firm or cost of

capital varied with the variation in the utilization of debt

capital due to tax benefits (Baral 1996).

Since Modigliani and Miller's (1958) irrelevance proposition,

firm's capital structure decisions have been intensely

investigated. The irrelevance proposition states that under

strict assumptions, among which are the absence of

corporate taxes, the structure of capital is irrelevant to the

determination of a company's value. The assumption on

taxes proved to be crucial for the irrelevance proposition. In

fact, a few years later, Modigliani and Miller (1963)

concluded that the introduction of corporate taxes and the

possibility of deducting interest on debt from taxable profits

would induce firms to be completely financed by debt.

However, as this is not usually observed, several authors,

including Modigliani and Miller themselves in Modigliani and

Miller (1963), argued that bankruptcy costs, and other costs

associated with debt, could explain why firms were not

totally financed by debt. This discussion on the benefits and

costs of debt is central to the trade-off theory of capital

structure. According to this theory, there are forces leading

firms to less leverage, for instance bankruptcy costs, and

forces leading to more leverage, among them the above

mentioned tax benefits of debt and the agency costs of free

cash flow. The combination of these forces results in the

existence of a target leverage at which the value of firms is

maximized. The main predictions of this theory on leverage

ratios are related with the profitability of firms. Profitability

should have a positive impact on leverage, as it contributes

to a decrease in bankruptcy costs. In addition, more

profitable firms benefit more from the tax benefits of debt

(DeAngelo and Masulis, 1980).

As these firms have freer cash-flow, the existence of debt

payments also helps to reduce agency costs of equity, by

aligning the interests of managers and shareholders (Jensen

and Meckling, 1976, and Jensen, 1986). Besides profitability,

there are other characteristics of firms that help to explain

target leverages. According to theory, bankruptcy costs are

expected to be lower for firms with more tangible assets, as

these could be used as collateral. In addition, the existence

of depreciation expenses helps to explain less leverage, as

these expenses result in tax benefits.

Studies showed contradictory results about the relationship

between increased use of debt in capital structure and firms

performance. Some studies (Taub, 1975; Roden and

Lewellen, 1995; Champion, 1999; Ghosh et al., 2000;

Hadlock and James, 2002, Berger and Bonaccorsi di Patti,

2006) showed positive relationship and some (Kester, 1986;

Friend and Lang, 1988, Fame and French, 1998, Gleason et

al., 2000; Miserly and Li, 2000, Booth et al., 2001 Ibrahim,

2009) showed negative or weak/no relationship.


3. RESEARCH METHODOLOGY

3.1 RESEARCH DESIGN

“A research design is the arrangement of conditions for

collection and analysis of data in a manner that aims to

combine relevance to the research purpose with economy in

procedure.” For this research purpose, the research design is

analytical and descriptive design.

3.2 UNIT OF ANALYSIS

Unit of analysis means the study of variables associated with

the research problem. There are several variables under the

study but the main variables have to be studied. For this

research, a unit of analysis is SBI.

3.3 SAMPLING DESIGN

When some of the elements are selected with the intention

of finding out something about the population from which

they are taken, that group of elements are referred to as

sample and the way in which sample is selected is referred to

as 'sample design. 'The sampling design for this research

“convenience based non – probability sampling.” The non –

probability sampling means wherein items for the sample are

deliberately selected by the researcher leading to personal

bias.

3.4 DATA COLLECTION METHOD

For this research purpose, the data have been collected

through annual reports of the SBI. The present study is done

for the last five Accounting Years i.e. 2007-08 to 2011-12. The

secondary data will be very helpful in evolving an

appropriate methodology for the study and in formulating a

conceptual framework for the study. For these purposes,

various secondary sources like customer satisfaction index,

annual reports of banks, books and periodicals, research

articles, seminar reports, working papers, study reports of

government agencies, news papers, study reports of expert

committees, plan documents, web sites etc.

3.5 OBJECTIVE

The purpose of this paper is to demonstrate the impact of

defining the main variables of capital structure and

performance on experimental results. Therefore, the

following hypotheses are extracted :

1. There is a significant relation between total debt to

owners fund & return on long term fund of SBI.


owners fund & return on net worth of SBI.


owners fund & return on assets of SBI.

4. There is significant relation between total debt to

owners fund & total income to capital employed of

SBI.


owners fund & EPS of SBI.

3.6 DATA ANALYSIS & INTERPRETATION

After gathering necessary data, they were analyzed by Excel

and the variables were calculated. Then the variables

entered in SPSS software and then correlation between

dependent and independent variables were measured by

using Pearson correlation coefficient. The four profitability

ratios of five years & one capital ratio for those five years

were analysed for finding correlation. Correlation is

denoted by r. if r =1 then its correlation is positive &

perfectly correlated. If r=-1 then its correlation is negative.

If r=-0 then it's known as there isn't any correlation. The

following data were collected for research purpose.

Year R 2007 -08 2008 -09 2009 -10 2010 -11 2011 -12

Total debt to owners fund ratio 10.96 12.81 12.19 14.37 12.43

Return on long term fund 0.57 86.83 100.35 95.02 96.73 96.84

Return on net worth 0.20 13.73 15.75 13.89 12.71 13.94

Return on assets 0.00 1251.05 1023.40 1038.76 912.73 776.48

Total income to capital employed 0.23 8.96 8.99 8.62 8.48 9.40

Earning per share 0.065 106.56 143.67 144.37 116.07 174.15


The table shows the performance ratios of Return on long

term fund, Return on net worth, Return on assets, total

income to capital employed & earning per share & capital

structure variable ratio of total debt to owner's fund. The

correlation between long term debt to owners fund & Return

on net worth, Return on long term fund, Return on assets,

total income to capital employed & earning per share were

defined by taking five years ratios of SBI.

3.7 FINDINGS & CONCLUSION

Tests on coefficient of correlation demonstrated that there is

a meaningful link between one variables of capital structure

and four variables of performance except the link between

return on assets that is not meaningful. As per the above

table the ratios of profitability i.e. return on long term fund,

Return on net worth, Return on assets, total income to

capital employed & earning per share is found.

1. The table shows that there is a positive correlation

between total debt to owners fund & return on long

term fund as the value of r is positive. But that's not

perfectly positive as its value is less than one i.e.

0.57. So the null hypothesis is rejected &

alternative hypothesis is accepted as there is

significant relation between these two

variables of SBI.

2. There is a negative correlation between total debt

to owners fund & return on net worth as the value of

r is negative. But that's not perfectly negative as its

value is more than minus one i.e. -0.20. So the null

hypothesis is rejected & alternative hypothesis is

accepted as there is significant relation between

these two variables.

3. There isn't any correlation between total debt to

owners fund & return on assets as the value of r is

zero. So the null hypothesis is accepted &

alternative hypothesis is rejected as there isn't any

significant relation between these two variables.


to owners fund & total income to capital employed

as the value of r is negative. But that's not perfectly

negative as its value is more than minus one i.e. -

0.23. So the null hypothesis is rejected &

alternative hypothesis is accepted as there is

significant relation between these two

variables.


to owners fund & Earning per share as the value of r

is negative. But that's not perfectly negative as its

value is more than minus one i.e. -0.065. So the null

hypothesis is rejected & alternative hypothesis is

accepted as there is significant relation between

these two variables.

CONCLUSION

Financing decisions are one of the most critical areas for

finance managers. It has direct impact on capital structure

and financial performance of the companies. It has always

been an area for interest for researchers to understand the

relationship between capital structure and financial

performance of the company. The research defined that the

capital structure decision affects the profitability of any

companies. The capital structure of SBI is having some

negative & positive effects on different profitability ratios

over the period. When there is change in capital structure it

will also make changes in performance of bank.

REFERENCES

1. M Y Khan & P K Jain, “Financial Management”, Fifth edition, TATA

McGaw Hill Education private ltd., 2010, pp. 6.1-6.72

2. Dr.P.K Srivastava, “Banking Theory & Practises”, tenth edition,

Hymaliya Publishing house, 2007, pp.30-54

3. Abor, J. (2005), "The effect of capital structure on profitability: an

empirical analysis of Listed firms in Ghana", Journal of Risk

Finance, Vol. 6 pp.438-47.

4. Berger, A., Bonaccorsi di Patti, E. (2006), "Capital structure and

firm performance: a new approach to testing agency theory and

an application to the banking industry", Journal of Banking and

Finance, Vol. 30 pp.1065-102.

5. Gleason, K., Mathur, L., Mathur, I. (2000), "The interrelationship

between culture, capital structure, and performance: evidence

from European retailers", Journal of Business Research, Vol. 50

pp.185-91.

6. http://www.eurojournals.com/ejefas_24_01.pdf


INTRODUCTION

he concept of Micro Finance in India is gaining importance all

Tover the world especially in developing countries due to its

unique features and specialties. Although the concept has

recent origin, it has a deep and lasting impact. It is necessary to

understand the reasonable tray behind development of this concept.

There are various reasons behind growth of Micro Finance phenomenon.

One of the most important and dominant reasons is the changing social

structure and change in the awareness of different sections of the

society. The classical economists usually considered the problems of

elite classes and select sections of the society as the genuine problems of

economic process. The neglected, socially deprived and low income

classes were not even the matter of consideration of these thinkers.

Selective approach and sectional thinking was the major focus of these

thinkers. Hence larger but neglected sections of the society was never

the mainstream focus of these thinkers. It was only in the 70's of the last

century where the scenario began to change. Economists and thinkers

like G. MyridalI and others started thinking in terms of developing

economies. The low income and resource-less class became the focus of

economic discussions. This was further geared up by thinkers and experts

like Md. Yunus, Amartya Sen and many others. Today the major plank of

economic thinking is how to uplift socio-economic standards and

participation of the have-nots in the economic processes. Even with

limited resources and uncertain income, this section also can contribute

to the developmental process for which an appropriate system, structure

and positive attitude is needed. Micro Finance is the solution offered

from this point of view.

“MICRO FINANCE -

OPPORTUNITIES & CHALLENGES

IN INDIA”

DR. SANJAY KAPTAN

PROFESSOR & HEAD,

DEPARTMENT OF COMMERCE

& RESEARCH CENTRE,

UNIVERSITY OF PUNE

FINANCE &

BANKING

MANAGEMENT


STATEMENT OF THE PROBLEM

The movement of helping the socially and economically

neglected section of the society, low income earners, wage

earners, small entrepreneurs and landless labourers to

participate in the economic process has come out in the

form of Micro Finance. Today a large section of the society is

linked with the financial inclusion process through Micro

Finance and Self Help Groups. The issues which raise

questions regarding Micro Finance and related activities are

-

Whether the idea of Micro Finance and SHG is

rightly accepted by the people?

Whether beneficiaries of this scheme participate in

true spirit in such movements?

Further more can Micro Finance and such related

activities bring desired change in the society ?

Though conceptually the idea of people coming together,

working together and achieving common goals appears very

sound; however there are many limitations and practical

hindrances in the whole process of implementation. Many

concepts that theoretically proved to have a great utility are

often found less effective in practice. The conceptual

strengths are lost due to procedural and practical

weaknesses. Hence even in the case of Micro Finance, the

questions which remain to be answered are-

To what extent the idea of Micro Finance shall be

successful ?

What are the likely hindrances in its success ?

What future it may have in the years to come ?

Can Micro Finance alter the socio-economic status

of its potential beneficiaries ?

Hence the title of the study is “Micro Finance – Opportunities

& Challenges in India”

OBJECTIVES OF THE STUDY

The principal objectives of the study are stated as follows-

1. To identify the reasons of growth of Micro Finance

movement in Indian Context.

2. To examine the factors favouring Micro Finance in

India.

3. To enlist the determinants influencing Micro

Finance structure and systems in India.

4. To identify hindrances in the progress of Micro

Finance.

RELEVANCE OF THE STUDY

The issue of Micro Finance has now become very important

in India with a population of 120 million; the economic

problems have become very critical and complex. The

pyramid of economy is unevenly distributed. The small and

micro-size vertex is very strong with concentrated wealth

and wealth generating resources; whereas the large and

widespread bottom has become extremely weak and has

thin opportunities to participate in the economic activities.

This paradox and contradiction needs to be rightly attended.

It will be inappropriate to presume that weakness in the

social structure will not disturb the economic stability. On

the contrary the vis-à-vis is also true.

When a large section of the society is devoid of meaningful

economic opportunities, it is not possible that this section

will accept the growing inequalities and disequilibrium

without any reasons. On the contrary, the old maxim,

“dissatisfaction has seeds of revolution” may come true.

On this backdrop the immediate solution is to minimize the

widening gap, create a favourable situation and encourage

participation of society socially deprived section of the

society in meaningful economic exercises. For this

purpose, 'Micro Finance' is a key solution. With Micro

Finance many of the socio economic problems can be

addressed meaningfully.

DISCUSSION

1. GROWTH OF MICRO FINANCE MOVEMENT IN

INDIAN CONTEXT

Today the number of Self Help Groups and networks working

for Micro Finance has increased significantly. Almost in

every state there is a well established network of small

groups working for self help and promotion of Micro Finance

activities. The emergence of such groups has occurred in

last 2 decades. It is up surgence of small but well defined

movement for collective action and benefit to the needy and


neglected sections of the society. It will be improper to

deny the existence and contribution of such small groups in

the process of development and neglected sections of the

society. This section includes self employed women,

household workers, homemakers and women working in

unorganized sectors either as independent workers or on a

contractual basis. These workers have no protection of law

and no assurance of security from any Governmental

authority.

The principal reason of bringing these sections under one

umbrella is to develop their economic strength and provide

them with financial security. Though individually they are

small, negligible and have insignificant strength, however

collectively they become a force to be recognized. The

purpose of organization of Self Help Groups is to develop this

kind of acceptable, strong and responsive force which will

work for upliftment of poor and neglected sections of the

society. This movement shall educate about economic and

financial system, create appropriate awareness and develop

a suitable mechanism for their participation in main stream

economic activities.

2. FACTORS FAVORING MICRO FINANCE IN INDIA

EMERGENCE OF MICRO FINANCE

The growth of Micro Finance in India should be linked with

socio-economic condition. An X-Ray analysis of growth

process of Micro Finance in India can throw light on a variety

of reasons responsible for growth of Micro Finance.

A few important reasons that have favoured the growth of

Micro Finance are presented here :

a. Many poor people are served by informal money

lenders who generally provide easy access to credit

but at high cost charging poor borrowers nominal

monthly effective interest that typically range

from 10% or more that 100%. Many times the

monthly effective rates of sustainable

formal financial institutions which are usually 5 to 20%.

b. The exploitation by formal money lenders both

social and economic is very high and of varied type.

This disturbs the fabric of peace, equality and

social justice. In many cases it results in social

unrest and feeling of retaliation in a very rash way.

c. The earning capacity and margin of savings of poor

in informal sector is very low and irregular. People

in this sector are unable to satisfy their savings to

meet their present and future needs. This often

results in vicious circle of indebtedness which

never ends. The only way to overcome this vicious

circle is to enhance savings above expenses and to

provide a financial support for sustainable

development.

Illiteracy, lack of awareness, absence of prudent thinking

are some of the important reasons responsible for failure of

the people in improving their economic lot. Belief in

destiny, lack of training and inappropriate financial as well

as economic understanding also mars their chances to

improve their socio economic status.

3. CONSTITUENTS OF MICRO FINANCE STRUCTURE

Present Micro Finance structure in India is influenced by

certain institutional as well as policy considerations. It is

necessary to identify all such factors leading to constitution

of a particular type of Micro Finance structure in India.

A few important determinants responsible for formation of a

typical Micro Finance structure are presented here -

a. Prevailing policies of government- both central and

state encourage formation of Self Help Groups

working for promotion of financial independence

and financial literacy among deprived and

neglected sections of the society.

b. Self Help Groups backed by bank and financial

institution are coming up to promote economic

awareness, skill development and self

employment.

c. The principle reason for promotion of Self Help

Groups is to create a planet of economic

empowerment and increase the total participation

of various social and economically backward

classes by providing them employment

opportunities, skills and capacity building

for their self development.

4. WHAT HAMPERS GROWTH OF MICRO FINANCE ?

Though initially a great lead was taken to promote Micro


Finance and Self Help Groups in India, however today it

seems to be a movement lagging behind and sinking due to its

own weight. A careful analysis of this fall out can offer

insights to improve its present status. Few important reasons

responsible for restricted success can be identified as

follows-

A. POLITICAL INTERVENTION

The continuous and growing political intervention for

developing social and economic pressure groups is a major

problem in sound development of Micro Finance movement.

Politicians and opinion makers consider Self Help Groups as

their power pocket. This has curbed the effectiveness and

utility of Self Help Groups movement.

B. MYOPIC VISION

The promoters and leaders of Self Help Groups have not

shown the desired, positive and broad based vision to give

direction to Self Help Groups. On the contrary their

leadership has worked to achieve only short term objectives

and few self centered goals, which has worked as a curse in

the development of sound financial and social upliftment

movement.

C. LACK OF APPROPRIATE STRUCTURE AND SYSTEMS

The Self Help Groups require a well defined scientifically

structured organizational set up which can improve its

effectiveness and impact. However, most of the Self Help

Groups are struggling for suitable organizational framework.

Their failure in developing such a framework is responsible

for lack of effective implementation of many socio-economic

transformation programmes. The most cherished objectives

remain on paper- unfulfilled and unsolved.

CONCLUSION

The above discussion helps us to understand the process and

problems associated with growth and development of Micro

Finance in India. In true sense, Micro Finance movement can

play the role of catalyst for quick and effective

transformation of Indian society. It is the agency which has

tremendous potential for expediting growth and

developmental process. It is an appropriate transformation

agency. The only hurdle with progress is absence of vision and

lack of leadership. Association of dedicated workers can

definitely promote a sound Micro Finance movement in India.


HUMAN

RESOURCES

MANAGEMENT

INTRODUCTION

Employees are the most important possessions of any organization

and their growth and development are indispensable parameters

for the enhancement of people and creating an encouraging

working environment.

In essence, the function must be a business partner in the organization.

Most observers of the training and development, human resource

development, and performance improvement have indicated that for the

HRD to become a true business partner, three things must be giving

importance and looked into :

The overall strategic and operational framework of the

organization should make itself one with the Human Resource

Development.

Essential operating mangers should be encouraged to enter into

partnerships within themselves.

There must be a comprehensive measurement and evaluation

process to capture the contribution of human resource

development.

Management Training and development has received much criticism in

the recent years. In most organization, teaching managers how to

manage has been a difficult, haphazard, and often unsuccessful exercise.

After years of observing corporations, business and industry still struggle

with a variety of approaches to management training. Some researchers

suggest that management training has failed because it has no connection

to real life in the company.

“TRAINING EFFECTIVENESS FROM

HRD MANAGER’S PERSPECTIVE”

DR. NETRA NEELAM

ASSISTANT PROFESSOR

SYMBIOSIS INTERNATIONAL UNIVERSITY

SYMBIOSIS CENTRE FOR MANAGEMENT

STUDIES, PUNE


The five most common reasons for failure of training

include :

Programs are not linked specifically to strategies,

challenges or problem in the organization.

Programs are designed to create awareness and

understanding, but not competence.

Programs focus on individual rather than operating

units.

Participants attend programs for reasons other

than personal or organizational need.

Programs fail to help participants confront reality.

However, in some organizations, the status of the training

and development function has been enhanced in recent

years. Some organizations have credited training workforce

as a major ingredient in achieving organizational objectives

and overall success.

The growth of training and development has also

contributed to accountability. One of the most significant

jumps in formal training and development budgets occurred

in 1996, with a 16% increase reflected in a major magazine's

annual industry report. As budgets continue to grow, so does

the concern for accountability, along with a necessity to

show a contribution to the organization. Budgets' growth

should cause many organizations to step up to the challenge

and measure the success of the training function.

DEVELOPING A RESULTS-BASED FOCUS

The focus on business results should be integrated

throughout the HRD cycle. Training programs should be

linked to business results. To help eliminate confusion over

the outcome that can be expected from an evaluation

program, this paper tries to examine the HRD managers

perspective towards Training programs in their

organizations. The term 'evaluation' will be used as an all-

inclusive term and, occasionally, 'measuring results' will

refer to the measurement aspect of the evaluation.

Developing results-based HRD greatly depends on the proper

philosophy and attitude among the HRD staff and the

employees.

STATEMENT OF THE PROBLEM

Arranging a performance linked training project is

considerable towards escalating the efficiency of

employees.

The performances of managers in the respective

departments are directly proportionate to the quality of

training programs organized for them by the HRD managers.

So upgrading and changing the training programmes offered

to an individual manager are essential in the manufacturing

and information technology industries where revolution is

consistent.

OBJECTIVES OF THE STUDY

To study the perspective of HRD managers towards training

programs and understanding from them how results-based

are the training programs in their organizations.

HYPOTHESIS

HRD managers find training programs to be effective in the

organizations.

RESEARCH METHODOLOGY

The study is designed to understand the perspective of HRD

managers towards training programs organized and

conducted in their organizations.

RESEARCH DESIGN

The questionnaire used for the study for responses of

training manager is developed by Jack J. Phillips. This

questionnaire consisted of 30 questions aimed at finding out

how results-based are training and development programs in

the organization according to the HRD managers. Each of

these 30 questions has to be answered by selecting any one

of the three responses given below it.

1 point for each (a) response.

3 points for each (b) response.

5 points for each © response.

Thus, the total points per respondent will be between 30 and

150 points.


RELIABILITY TESTING

The responses on the scale used for the study was tested for its reliability by using Cronbach's Alpha where the acceptable score is

0.7 and above. The reliability score of the data was observed to be 0. 97.

VALIDITY TESTING

The researcher has thought a score of 75% on the scale would suffice the purpose of research. This indicates that if the total score

of the respondent for all the questions is above 75%, then the training program would be considered effective.

STATISTICAL TOOLS USED

Chi Square Test

RESULTS AND DISCUSSION

TABLE 1: PERSPECTIVE OF HRD MANAGERS

FIG. 1 : PERSPECTIVE OF HRD MANAGERS

IN THE ABOVE FIGURE 'X' AXIS REPRESENTS THE NUMBER OF RESPONDENTS AND THE 'Y' AXIS REPRESENTS THE SCORE ON THE SCALE

Respondent 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15Min Score 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30ObservedScore 118 86 120 114 110 136 130 120 100 107 126 104 108 116 116ExpectedScore 112.5 112.5 112.5 112.5 112.5 112.5 112.5 112.5 112.5 112.5 112.5 112.5 112.5 112.5 112.5Max Score 150 150 150 150 150 150

150

150 150

150

150

150

150 150 150

Source: Primary Data of Authors Study


ANALYSIS

The Chi Square Value for the above data given in table 1 is

19.536. Chi Square table value at 14 degree of freedom at 5

percent level of significance is 23.685. This calculated value

is lesser than the table value; hence the hypothesis of 'HRD

managers finding training effective' is validated and proved.

INTERPRETATIONS

Table 1 and Fig 1 show that HRD Managers find training

function to be effective in the organizations. It was seen

that the direction of the training and development functions

in the organizations were based on a mission, a strategic

plan and an operating goal.

Most new training programs are initiated on after needs

analysis has indicated that the program is needed. When a

major organizational change is made, HRD managers

systematically evaluate the skills and knowledge needed by

the employees.

The responsibility of training results is shared by training

staff, participants and mangers all working together to

ensure success. New training programs are developed in the

most economical and practical way to meet deadlines and

cost objectives.

To ensure that training is transferred into performance on

the job, a variety of training transfer strategies appropriate

at each situation is encouraged.

The results of training programs are communicated

routinely to the participants. Managers' involvement in the

training programs is very specific and with clear share of

responsibility.

A zero-based budget system is followed for training activity.

The top management's involvement in the implementation

of Training and Development program includes program

participation to see what's covered, conducting major

segments of the program and requiring key executives to be

involved.

When an employee completes a training program and

returns to the job, his or her manger is likely to support use

of the program material and give positive rewards when the

material is used successfully.

CONCLUSION

On the basis of the above research we can conclude that,

though the training functions in the organizations are

criticized for various reasons, the people responsible to

organize and arrange for the training programs find it very

effective.

SCOPE FOR FURTHER RESEARCH

This study was focused only on manufacturing and

information technology industries having a turnover of

above 50 crores in and around Pune. Future research can

replicate this study in other sectors within or outside the city

of Pune.

REFERENCES

Ashton, D. 1998. Skill formation: Redirecting the Research Agenda, in

Coffield, F. (ed.), Learning at Work, University of Bristol: Policy Press.

Arulampalam, W. and Booth, A. 1998. 'Training and labour market flexibility:

is there a trade-off?, British Journal of Industrial Relations, 36, 4, 521-536.

Berry, J.K. “ Linking Management Development to Business Strategies,”

Training and Development, August 1990, pp. 20-21.

Burgoyne, J. & Cooper, C. L. 1975. 'Evaluation Methodology'. Journal of

Occupational Psychology, 48, 53-62.

Chakrabarti Shampa, 2006. 'Human Performance Improvement and the Role of

the Analyst', Performance Management, The ICFAI University Press.

Chiaburu, Dan S.,Tekleab, Amanuel G. 2005. 'Individual and contextual

influences on multiple dimensions of training effectiveness'. Journal of

European Industrial Training, Vol. 29 Issue 8, p604-626, 23p.

. Ching-Yaw Chen Sok, Phyra Sok, Keomony 2007. 'Exploring potential factors

leading to effective training'. Journal of Management Development, Vol. 26

Issue 9, p843-856, 14p.

Desimone, R.L., Werner, J.M. and Harris, D.M. (2002). Human Resource

Development. (3rded) Orlando, Harcourt College Publishers.

Industry Report, Training, 33 (10), 1996, pp. 36-79.

Ibrahim, Mohamed E. 'Measuring Training Effectiveness', Journal of

Management Research (09725814); Dec2004, Vol. 4 Issue 3, p147-155, 9p.

Jackson, N. and Jordan S. 1999. 'Skills training, Who benefits?' paper

presented to the conference 'Researching Work and Learning', University of

Leeds, 10-12 September.

Jaap, T. and Watson J.A. 1970. 'A conceptual approach to training' in Personnel

Management.

Jha Shwetabh, Feb 2007. 'How to reward employees', Business World,

K. Vasantha Aug 2006, ' HR trends in Information Technology, HRM Review,

Phillips, J. J. (1991). Handbook of training evaluation and measurement ndmethods. (2 ed.). Gulf Publishing Houston, Texas.

King, J. P. “ Union Pacific Gets Back on Track with Customer,” Training and

Development, August 1993, pp. 30-40.


Murphy, K.R., and Cleveland, J.N. (1991), Performance Appraisal. An

Organizational Perspective, Needham Heights, MA: Allyn and Bacon.

Rainbird, H. 1994. 'The changing role of the training function: a test for the

integration of Human Resource and business strategies', Human Resource

Management Journal, 5,1, 72-89.

Rainbird, H., Munro, A., Holly, L. and Leisten, R 1999. 'The Future of Work in

the Public Sector: Learning and Workplace Inequality', University of Leeds,

Future of Work Programme, discussion paper no. 2.

Sahinidis, Alexandras G.Bouris, John. 2008 'Employee perceived training

effectiveness relationship to employee attitudes', Journal of European

Industrial Training, Vol. 32 Issue 1, p63-76, 14p.

Stone Ron Drew. The Real Value of Training, Tata McGraw Hill Education Pvt

Ltd, New Delhi.

T. T. Baldwin, & Ford, J. K. 1988. Transfer of training: A review and directions

for future research. Personnel Review, 26(3), 201-213.

VRK Prasad. 2006. 'Managerial and Executive Effectiveness', Human Resource

Management, The ICFAI University Press.


HUMAN

RESOURCE

MANAGEMENT

xecutive in modern organization is by virtue of his position or

Eknowledge is responsible for a contribution that materially

affects the capacity of the organization to perform and obtain

results_ this be the capacity of a business to bring out a new product or to

obtain a large share of a given market” wrote Peter Drucker a renowned

management thinker of our times. It may be, for instance, the capacity of

a hospital to provide bedside care to its patients. Such a man (or woman)

must make decisions. He just cannot carry out orders. He must take

responsibility of his contribution. And he is supposed, by virtue of his

knowledge, to be better equipped to make the right decision than anyone

else. He may be overridden (superseded) or he may be demoted or fired.

But as long as he has the job, the goals, the standards and the

contribution are in his keeping. Drucker wrote further.

MANAGER AND EXECUTIVE

Most managers are executives – though not all. Many people, in other

words, are superiors of other people (and often, of fairly large numbers of

other people) – and still do not seriously affect the ability of the

organization to perform. For instance, most shop floor foremen in a

manufacturing plant belong to this category.

They are 'overseers' in the literal sense of the word. They are 'managers' in

that they manage the work of others. But they have neither the

responsibility for, nor authority over, the direction, the content, and the

quality of the work or the methods of its performance. They can still be

measured and appraised very largely in terms of efficiency and quality,

and by the yardsticks we have developed to measure and appraise the

work and performance of the manual worker. Executives however, are

individual professionals who are expected by virtue of their position or

knowledge to make decisions in normal course of their work that have

“DEVELOPING EXECUTIVE

(MANAGERIAL) COMPETENCIES”

DR. TAYYAB S. SHAIKH

HR & TRAINING CONSULTANT

FORMERLY, EXECUTIVE DIRECTOR

PERSONNEL & EXECUTIVE DIRECTOR,

NATIONAL INSTITUTE OF AVIATION

MANAGEMENT & RESEARCH,

AIRPORTS AUTHORITY OF INDIA,

NEW DELHI


significant impact on the performance and results of the

work. It must be remembered that for the modern

organizations needs both 'managers' and 'executives'.

COMPETENCIES CAN BE LEARNED

For an organization to grow & achieve its goals and

objectives it is pertinent that its managers and executives

are effective in their job. Learning and practicing various

competencies can lead to effectiveness of work. A

management competency for the purpose of this article is

defined as a “combination of knowledge and skills and the

ability to use these in carrying out managerial job

responsibilities”. By this definition, a competent manager

or executive is a highly effective performer and not simply

adequate. The objective in establishing each of these

competencies is to determine as precisely and accurately as

possible what managers / executives need to know and be

able to apply in order to perform their job responsibilities

effectively and efficiently. The requirement of

competencies can differ at various levels i.e. at junior

executive level, intermediate or middle level and at senior

executive level. Since most of the management students on

completion of their studies will join as junior level executive

/ manager, in this article competency requirement at junior

/ base level are discussed.

COMPETENCY _ UNDERSTAND ROLES AND OBJECTIVES OF

THE ORGANIZATION

The indicators for this competency represent both internal

and external aspects of the department. All Management

levels need full use of this competency, in keeping with their

respective roles. At junior executive level indicators are :

ability to relate the goals and functions of the unit

supervised to those of the immediate organization

of which it is component,

ability to relate one's functions to those of

superiors, peers, subordinates, and clients,

ability to inform subordinates and clients of roles

and functions.

COMPETENCY – DETERMINING OBJECTIVES AND GOALS

For junior level executive goals and objectives are focused

internally, involving unit or project and must be consistent

with overall organizational objectives. Competencies in this

area are :

ability to develop work plans in accordance with

the goals of the immediate organization,

ability to communicate goals clearly and

persuasively to subordinates and establish targets

and milestones,

ability to monitor progress.

COMPETENCY – ESTABLISHING PRIORITIES AMONG

ALTERNATIVES

Since the priority process generally demands some

compromise, junior executives must expect a certain

amount of dissatisfaction with any ordering or priorities or

selecting among options. For junior executives competency

to tackle such situation will require :

ability to identify alternatives and evaluation

criterion,

ability to discriminate in respect of the urgency

and importance of tasks,

ability to explain priorities to subordinates and

obtain commitment,

ability to establish priorities among tasks.

COMPETENCY – PROBLEM SOLVING AND EFFECTIVE

DECISION MAKING

The need for this competency is basically the same at all

management levels. What differ are the complexity,

sensitivity and impact of the solutions and decisions.

At junior level this means :

ability to identify problems and analyze cause,

abi l i ty to identify and supervise the

implementation of corrective measures,

ability to identify solutions to potential problems

and recommend the best corrective measures,

ability to identify and evaluate options,

ability to make timely decisions within the limits of


delegated authority.

COMPETENCY – DEVELOPING AND IMPLEMENTING PLANS

The need for this competency is basically the same at all

management levels. The difference is in the scope and

complexity of position responsibilities. At junior executive

level it will include :

ability to schedule activities and work assignments

and prepare work plans.

ability to meet the organization's operational

requirements,

ability to communicate plans,

ability to measure results and make adjustments.

COMPETENCY – ORGANIZING RESOURCES SO AS TO

ACCOMPLISH OBJECTIVES AND GOALS

This competency is crucial to office resources management

and effective planning and achievement of objectives. In

case of junior executive, this competency means :

ability to effectively utilize and control resources

provided,

ability to identify problems associated with the

allocation and utilization of resources,

ability to identify and eliminate the overlapping of

tasks.

COMPETENCY – DELEGATION OF AUTHORITY AND SETTING

PERFORMANCE STANDARDS

This is an important competency for all management levels.

Delegation should be used not only for the effective

accomplishments or work but also for the development of

subordinates. At junior executive level indicators of this

competency include :

ability to outline clearly and concisely the

responsibility and tasks being assigned to

subordinates and obtain their acceptance and

understanding of results expected,

ability to monitor progress effectively,

ability to work within one's own delegated

authority and to know where and when to refer

issues over which others hold authority.

ability to explain how performance standards

contribute to the accomplishment of unit goals,

ability to provide timely feedback to subordinates.

COMPETENCY – APPLYING DEPARTMENT PERSONNEL

SYSTEMS & ADMINISTRATIVE POLICIES AND PRACTICES

Managers at all levels have a special responsibility and

obligation to effectively utilize the resources of

department's various support systems in the discharge of

their duties. Managers should be familiar with all support

services and the impact these have on individuals. At junior

executive level it entails :

ability to make effective use of staff specialist

services,

ability to communicate administrative procedures

effectively and to recommend changes to systems

and procedures,

ability to recognize and acknowledge the rules,

rights and obligations of the union and

management,

ability to deal effectively with employee

complaints and disciplinary cases,

ability to review the performance and assess the

potential of subordinates,

ability to identity training needs of subordinates

and provide on the job training and coaching.

COMPETENCY – MANAGING FINANCIAL AND MATERIAL

RESOURCES

This competency requires a solid understanding of the

nature of financial management and knowledge of the rules,

responsibilities, authorities and account abilities of the

manger and financial specialist. Executives at all levels

share a special responsibility above and beyond that of day-

to-day operations for effective management of financial and

material resources in keeping with the organization's

policies and practice. For junior executives, it is an –


ability to oversee financial resources within

delegated authority,

ability to budget and cost the unit's operational

plans,

ability to operate within a specific financial

management system,

ability to oversee and control consumable

inventory.

COMPETENCY – DEMONSTRATING CREDIBILITY AS A

MANAGER

This competency is important for all levels of managers &

executives since they are in a position to set role model for

subordinates. For junior level executives, it means :

ability to earn respect and acceptance from others,

ability to instill confidence in others,

ability to set a good example for subordinates,

ability to remain calm and function effectively

under pressure and / or extreme conditions.

COMPETENCY – CREATING AN ORGANIZATION CLIMATE

CONDUCIVE TO A MOTIVATED WORKFORCE

This competency is important for all levels of managers &

executives because its influence on productivity. At junior

executive level it means :

ability to utilize motivational techniques in the

work place,

ability to maintain subordinates' morale in difficult

situation,

ability to intervene when subordinates behavior is

deter mental to the work group,

ability to establish and maintain support with

subordinates,

ability to identify and reduce de-motivational

working conditions,

ability to develop a result oriented team that

allows for individual subordinates' needs

and aspirations.

COMPETENCY – DEALING WITH DIVERGENT VIEWS AND

NEGOTIATES ON A WIDE VARIETY OF ISSUES

The need for negotiating skills is not limited to specialists in

labor relations or contract management. All managers must

be sensitive and objective in dealing with diverse points of

view. At junior executive's level, it translates into :

ability to assess divergent internal and external

views objectively and develop appropriate

responses in disputes,

ability to resolve differences through negotiations,

ability to resolve or reduce conflict,

ability to take the necessary rectifying action in a

conflict or refer the matter to a higher authority

along with recommendations,

ability to avoid win-lose situations where possible,

ability to identify creative solutions to avoid a

potential dispute.

COMPETENCY – SPEAKING EFFECTIVELY AND MAKE ORAL

PRESENTATIONS

It is critical that development of this competency begin

early in a managerial career and reach a high degree of

proficiency at intermediate and senior levels. At junior

executive level, this competency covers :

ability to make formal (technical/administrative)

briefings to immediate superior within the branch/

unit,

ability to organize and conduct staff meetings for

the unit,

ability to communicate (speak & listen) effectively

with subordinates, superiors and clientele on a

one-to-one basis,

ability to use appropriate aids for presentation

COMPETENCY – EFFECTIVE WRITTEN COMMUNICATION

For Managers both the preparation and review of written


materials are important. Because this competency takes

considerable time to acquire, development must begin early

in individual's career. For junior executive this competency

means :

ability to write memos and reports and record

minutes,

ability to express (develop) arguments

systematically and persuasively,

ability to utilize effective reading techniques.

CONCLUSION

Executive (and Managerial) effectiveness is central to his

performance which in turn is key to the organizational

performance. Modern society depends for its functioning on

the effectiveness of large and small scale organizations, on

their performance and results. Executive effectiveness is

therefore essential to make modern society productive

economically and viable socially. Learning, imbibing,

developing and sharpening various competencies is no more a

matter of choice but a stark reality in the life of an executive.

Only executive effectiveness can enable this society to

harmonize its two needs: the need of an organization to

obtain from the individual the contribution it needs, and the

need of the individual to have organization serve as his tool

for the accomplishment of his goals and objectives. The

competencies must be learned and these can be learned.

REFERENCES

Peter F Drucker: The Effective Executive, Harper & Row, New York


GENERAL

MANAGEMENT

The study of family owned businesses is restricted only to the

enterprises indicated above The opinion/s are based on the

discussions with the members of the respective families and the

observations made during the stay of the learner in those firms.

Expressions communicated by the concerned are authentic However

assurance was given by the learner to maintain the confidentiality and

secrecy. Hence names[s] are not indicated.

One senior member of one of the family owned businesses vindicated

that: Do not always produce discord in a family-owned business, but they

are more apt to cause sparks to fly. Emotion is the added dimension as

brothers and sisters, uncles and aunts, nephews and nieces, and parents

and children work together. The individual managing such a business must

recognize the emotional dimension and make the necessary objective

decisions to ensure smooth functioning. Keeping apart the family

syndrome. Among members of a family who is active in a business, it may

be hard to be objective about one another's skills and abilities.

If emotional outbursts affected only the family, the manager might knock

a few heads together and move along. But quarrels and ill feelings among

relatives affect non-family employees as well. The manager's challenge is

to keep the bickering from interfering with work. In an emotional

atmosphere non family employees may be tempted to base their

decisions on family tensions - they know how their bosses react and are

influenced by this knowledge. But the organization cannot become a

warring camp. All employees must understand that their interests are

best served by a profitable organization, not by allegiance to particular

family members. But this is ideal in reality it does not happen. The leader

of the family business must not take sides with any member of the family,

but rather must demonstrate that disagreements will not be permitted to

“MANAGING FAMILY BUSINESS -

{ A CRITICAL STUDY OF SIX

FAMILY BUSINESSES }

PROF. S. D. BAGADE

PROFESSOR,

AIMS, PUNE


affect the business. This attitude discourages non-family

employees from politicking for position. When the family

leader demonstrates respect for the family and an

understanding of the differences, non-family employees are

not tempted to play politics. Almost all family members of

the business opined that generally brothers are amicable

with each other But when they get married ; their better

half is from other family { Her culture, priority, ambition,

aspirations, belief system and most important attitude as

well as career goals are different } If that person is having

the difficulty in becoming homogeneous with the latter

family members then problem is aggravated.

IS THE MANAGER REALLY IN CONTROL ?

The Head of a small family-owned organization is not

necessarily the person in charge. The family elder statesman

may be in charge of the business but day-to-day

management may be in the hands of other family members.

The ceiling may be too low on the amount of money that can

be spent without permission from too many members.

Unrealistic or unnecessary clearance procedures may result

in missed opportunities for increased profits, such as failing

to take advantage of a good price on raw materials or sales

inventory.

Personalities and emotional reactions work against efficient

operation. For example, even routine matters must be

authorized by top family members because Uncle Bill never

lets you forget your mistakes.

Efficiency may be reduced by relatives' engaging in

excessive family talk during working hours. The manager

must set an example and insist relatives refrain from chit-

chat on the job.

Managers may owe their positions to their age or to the

amount of capital they have invested and may lack

leadership ability.

Some family managers may hinder progress because they do

not know how to listen.

Family members in charge of operations must be capable of

using efficient management techniques.

Thick-skinned enough to live with family bickering.

Tough enough to make decisions stick.

Definite lines of authority are essential when a member of

the family manages operations and other relatives fill

various jobs. Family employees must discipline themselves

to work within the lines of authority and the responsibilities

of family members should be spelled out. Even then, it is

wise to have a non-family employee highly involved in

operations, to help resolve problems.

One solution to management problems is to let someone else

- a hired manager - run the day to-day show. The family

member retains a title and some authority, but the hired

assistant acts as a buffer between the family and the

organization. The assistant might be executive vice

president or chief operating officer and the family member,

president or chief executive officer.

With a hired manager, the family leaders are free to work on

future strategy, basic policy and growth, while the non-

family employee guides day-to-day operations. The

authority of the manager, whether family or non-family, to

suspend or discharge flagrant violators of company rules

must be clear. Management control is weakened if family

employees are exempt from rules.

CONSIDERATION ON THE AGENDA SHOULD BE GIVEN TO

Family goals for the future.

Plans of next-generation family members.

Who is interested in staying with the business?

Who has the most aptitude for leadership?

What if several able younger family members

aspire to lead the business ?

What role will other younger members play?

What if next-generation family members are not

interested in the business?

Grooming of future leaders.

The most likely time's major transitions will occur, barring

unexpected illness or death.

Preparations of present leaders for stepping down.

Financial aspects of leadership transitions.


The importance of preparing for succession before a new

leader must take over cannot be emphasized too strongly.

PERSONNEL PROBLEMS

A common challenge to family-owned companies is high

turnover among top non-family employees. Some relatives

resent outside talent and can make things unpleasant for

non-family executives. Also, top-notch managers and

workers may leave if most promotions go to family

members. Exit interviews are useful to find the cause of high

turnover. A departing key employee may tell you enough to

help you develop a positive course of action.

Again, it is wise to counsel non-family employees to not take

sides in family disputes. Outside employees who

demonstrate fairness and compatibility become a stabilizing

force in the company. The family needs these people and

should assure them of a future with the firm. Confronting a

trouble-causing relative is difficult at best, and firing one

may be out of the question. Consider these alternatives:

Counsel the family member on the responsibility to set an

example.

Encourage the relative to start a business in a noncompeting

line, if he or she has the management ability necessary for

success.

Transfer the relative to a branch office.

Find him or her job with another company.

In short, if you are unable to fire troublemakers, try to

change their attitudes or change their jobs.

SPENDING TO SAVE MONEY

In all the above businesses under study the long term capital

intensive decisions are taken amicably by involving every

member in the family. During the stretched meeting all pros

and cons are considered with transparency. It is confirmed

and conformed that this will lead to family business growth

and development. When acceded to by all; then only further

steps are taken. Out of the above mentioned seven firms the

members of the family reside together in very big house /

farm hose / bungalow. The kitchen, dining hall, drawing hall

is common. However every member is having a separate

[bed] room. In case the ladies are having difference of

opinions or disputes; the male gender candidates do not

interfere and become static spectators. Result yielded is the

disputed members amicably adjust, accommodate and

resolve the issue at their end. In one family owned business

the members get Rs. 10'000/- equally The expenses on

account of provisional household items, education, tuition

fees, health and hospital etc is spent on 'common' basis. At

the time of festival season a fixed amount is given to every

member. At any times, as owner-manager, a specific

investment will improve efficiency or profits, but other

family members may see the move as just another expense.

They view such expenditures as encroachments on year-end

dividends. It is important that these relatives understand

the concept of spending money to make money. Base your

arguments on facts and figures gathered by nonfamily

employees.

Suggest that the matter be settled on a bottom-line basis by

demonstrating how Spending "$x for this machine will

increase our profits by $y annually and will return our money

in four years.”

Should opposing relatives reject your projection, enlist the

help of outside advisers. Relatives may be more likely to

believe a banker, accountant or attorney than to accept your

judgment.

Keep in mind that it is unwise to have outside advisers who

are personally close to other family members.

In other situations, paid consultants can help prove the

worth of an opportunity. Such help is particularly valuable

with projects requiring specific expertise or intensive

research.

MAINTAINING THE STATUS QUO BLOCKS GROWTH

As relatives in a family-owned business grow older, they may

develop a preference for maintaining the status quo. They

become wary of change and afraid of risk. This attitude can,

and often does, block business growth.

The solution: Encourage status quo members to gradually

retire from the scene of operations. ! Dilute their influence

in management decisions. For example, give them an

opportunity to convert their investment in the organization

to preferred stock.

Engage estate planners who may suggest tax incentives for

giving or selling some of their stock to younger relatives.


Encourage them to take a larger role in community activities

or in an industry association.

Encourage their involvement in other directions, such as

pursuit of personal hobbies and interests.

Explore the possibility of restructuring the business, with a

new partnership agreement, for example. (Proper legal

advice is essential in restructuring.)

Such actions recognize the contributions of retreating

members and assist them in recovering their equity. At the

same time, the manager and active relatives can plan for the

future. In the aforesaid survey it is noticed that

diversification is systematically done. E. g. The organization

which was earlier concentrating on 'handloom & power loom

'added a new activity of manufacturing while cloth. As the

members of family became major; the business was

diversified in to real estate, sale? Purchase of plots, garden

restaurant, chemist and druggist, wholesale pharmaceutical

agency one member entered in politics who was

instrumental in using his good office to straighten the

problems concerned and connected with different offices &

financial institutes. However the brand name / banner were

not disturbed. Entire opportunity vests with those who are

operating that segment. The family looking after 'timber

merchandizing; opened one branch of manufacturing the

furniture 9 on made to order) and the other branch was

dealing with steel furniture. One family who was

manufacturing the electrical equipment; allotted the

geographical area and specified the jurisdiction of operation

for member's crystal clearly and the others were not

interfering outside their business defined.

HOW IS THE PIE DIVIDED ?

Paying family members and dividing profits among them can

be a challenge.

Many people feel they are underpaid, but the complaints

may be more specific and more personal in the family-

owned business. Uncle Jack just sits around and he makes

more than I do. Aunt Sue goes to Europe on the returns of

money her husband put into the business before he died ten

years ago. Your brother goofs off and makes more than you

do. How do you resolve these complaints? You can't entirely,

but you can be as fair as possible.

Equity that recognizes contributions can be distributed by

restructuring the company.

Salaries are best handled by matching them to industry

guidelines. Determine local salary ranges for various jobs

and use these as a guide for paying both family and non-

family personnel. When you tie pay to a job description you

recognize the value the industry puts on jobs and you treat

all employees fairly.

Fringe benefits can also be useful in establishing equity

among family members. Deferred profit-sharing plans,

pension plans, insurance programs and stock purchase

programs offer excellent means to placate family members

and, at the same time, help them build personal assets. Own

the profit pie is divided is vital to growth in a small business.

Profits are the seedbed for expansion, and lenders are

influenced by what is done with them. Relatives should know

the consequences to the business if all profits are converted

into dividends. The learner got an opportunity to witness the

business of an organization the partners were father and five

brothers. They appointed a Diwanji (Accountant). The net

profit was distributed @ 12% to each partner. 12% was

reserved as 'reserve for emergency' balance 16 % of net

profit was ploughed back for expansion of the business.

WHERE DO YOU FIND MONEY ?

Another major challenge in managing a family business is

obtaining money for growth.

Generally speaking, if the company is profitable, you can

borrow from your local lender, but when growth is

substantial, the company may outgrow its local bank. When

you see prospects for expansion, you should begin to plan for

it and consider techniques for financing. Planned financing

may be a combination of :

Taking or refinancing a mortgage using the company's assets

as collateral.

Asking suppliers to extend credit on purchases.

Factoring (selling) the company's receivables.

Inventory financing.

Borrowing from friends on a personal note basis.

Borrowing the cash surrender value of life insurance policies

owned by relatives.


Obtaining a long-term loan from an insurance company.

Working with a lender and the U.S. Small Business

Administration (SBA) to get a business loan.

Financing with a Small Business Investment Company

licensed by SBA.

If the business is a small corporation, the following

techniques also offer possible sources of money:

Selling a portion of the stock for cash to the company's

employees.

Selling some of the stock for cash to another company. In a

merger, you can use the credit of the larger company.

Contacting a regional investment banker who may privately

find a lender, using some of the company's stock as

collateral.

Contacting a national investment banker who will

underwrite some of the company's stock. This is called going

public.

Effective budgetary controls are important in seeking

growth funds. Such controls help the managing relative

determine the company's needs, and lenders regard them as

evidence of good management.

20 CHALLENGES FOR THE FAMILY BUSINESS

1. Emotions. Family problems will affect the

business. Divorce, separations, health or financial

problems also create difficult political situations

for the family members.

2. Informality. Absence of clear policies and business

norms for family members.

3. Tunnel vision. Lack of outside opinions and

diversity on how to operate the business.

4. Lack of written strategy. No documented plan or

long term planning.

5. Compensation problems for family members.

Dividends, salaries, benefits and compensation for

non-participating family members are not clearly

defined and justified.

6. Role confusion. Roles and responsibilities must be

clearly defined.

7. Lack of talent. Hiring family members who are not

qualified or lack the skills and abilities for the

organization. Inability to fire them when it is clear

they are not working out.

8. High turnover of non-family members. When

employees feel that the family “mafia”

will always advance over outsiders and when

employees realize that management is

incompetent.

9. Succession Planning. Most family organizations do

not have a plan for handing the power to the next

generation, leading to great political conflicts and

divisions.

10. Retirement and estate planning. Long term

planning to cover the necessities and realities of

older members when they leave the company.

11. Training. There should be a specific training

program when you integrate family

members into the company. This should provide specific

information that related to the goals,

expectations and obligations of the position.

12. Paternalistic. Control is centralized and influenced

by tradition instead of good management

practices.

13. Overly Conservative. Older family members try to

preserve the status quo and resist change.

Especially resistance to ideas and change proposed

by the younger generation.

14. Communication problems. Provoked by role

confusion, emotions (envy, fear, and anger),

political divisions or other relationship

problems.

15. Systematic thinking. Decisions are made day-to-

day in response to problems. No long-term planning

or strategic planning.

16. Exit strategy. No clear plan on how to sell, close or

walk away from the business.


17. Business valuation. No knowledge of the worth of

the business, and the factors that make it valuable

or decrease its value.

18. Growth. Problems due to lack of capital and new

investment or resistance to re-investment in the

business.

19. Vision. Each family member has a different vision of

the business and different goals.

20. Control of operations. Difficult to control other

members of the family. Lack of participation in the

day-to-day work and supervision required.

LEARN HOW TO MANAGE FAMILY IN A FAMILY BUSINESS

1. KEEP AN OPEN AND CLEAR L INE OF

COMMUNICATION

When it comes to any business, communication is key. In a

family business it is absolutely crucial to your success. Make

sure before you start a business with a family member or hire

a family member, discuss individual roles and

responsibilities, clearly define expectations, and make sure

everyone is in agreement, before you proceed. If you take

the time to do this, you will avoid potential threats down the

road.

2. BE LOGICAL, NOT EMOTIONAL

It is often difficult to be objective when you are dealing with

family. Feelings are hurt easily, and it is a common reaction to

get defensive instead of taking the time to look at the issue

from a logical perspective. Before you make a decision or

comment, try asking yourself, “How would I handle this

situation if I were dealing with a non-family member.” Ask

yourself that same question every time you need to make a

decision regarding a family member. The goal is to train your

mind to be more logical when dealing with emotional

situations. Be sure to clearly explain your decision to your

family member as you would to a non-family member.

3. REWARD COMPETENCE, NOT GENETICS

A good business owner or manager will reward their

employees based on performance, family members should be

held to the same standard. If a family member is not qualified

to be the VP of your company, hire someone who is. You may

think you are doing a good thing by providing a family

member with a job, but if they are not qualified, they can do

more damage than good when it comes to the success of your

business. Not to mention that nepotism is a fast way to

alienate the non-family members that work for you.

4. BE FAIR, NOT BIASED

Family feuds are better left at home. If you have conflict

between family members at work, encourage them to work

it out, outside of the office. If they are unable to do that,

treat the situation as you would if it were between non-

family members. In some cases you may need to discipline

them or ask them to go home for the day. Under no

circumstances should you engage in the conflict. If you take

sides, you are now part of the conflict. The same rule applies

if you are dealing with a situation involving a family member

and a non-family member. To be an effective manager you

need to have the ability to be fair and rational when running

your business.

5. TAKE TIME FOR EACH OTHER OUTSIDE OF THE

OFFICE

Believe it or not, all work and no play will drive your business

and relationships into the red. Make sure you not only

nurture your business, but take time to nurture your family

relationships as well. Try going out to dinner together one

night during the week, taking a weekend trip away from your

home and office, or trying to plan at least one longer

vacation each year to get away from it all. Be sure that no

matter what you do, have fun, and do not discuss the

business. Take the time for yourself and your family, and as a

result it will be better for your business.

The success of family business inevitably comes down to the

fine art of integrating and balancing the needs between

ownership, family and business. Here are ten reasons why

family businesses struggle.

CONCLUSION

Successful management of the family business depends upon

the able leadership who cements the bonds of loyalty

amongst all concerned members. The decision taken should

be appropriate after considering all details minutely. S/he

must be transparent and must take every one in the

confidence. 'Trust' and 'Patience' are the most important

aspects. There must be consistent innovate be ideation to

implement the same, the head should organize the right


teams and inflame them with the right spirit to take the

decisions and implement them in the large interest of the

partners.

REFERENCES

1. Managing Family Business Edited by Rajender Singh Rathore ICFI

Books 2008.

2. www.google.com

3. Personal observations and experience.

4. Discussion with the concerned authorities from the family

members of the sample.


GENERAL

MANAGEMENT

1.0 INTRODUCTION

rom day the student joins an educational institute, The institute

Fis responsible for their academic, personal and social growth. To

achieve this goal following activities are :

Class room teaching.

Practical work in Laboratories.

Invited lectures from Eminent thinkers, who motivate them ,

change their attitudes, and groom their personalities.

Excursion to different sites for exposing them to real life

scenarios.

During the above process, the students need to be managed. The Head

of the institution, the heads of the departments and teacher, and even

the supporting staff do complex task of student management in their

own way and in different capacities.

Effective and timely communicating with students, helping them,

guiding them , punishing them when they go wrong, communication and

statutory compliance with different government and other bodies.

Social media can be extremely beneficial in these activities and ignoring

power of social media in the dynamic world can be compared with ostrich

in the desert storm.

1.1 SOCIAL MEDIA

Social media refers to the means of interactions among people in which

they create, share, and exchange information and ideas in virtual

communities and networks [1].

“HARNESSING THE POWER

OF SOCIAL MEDIA IN HIGHER

EDUCATION INSTITUTIONS”

PROF. M. M. JUNAID F.

ASSISTANT PROFESSOR

AIMS, PUNE

DR. MANIK KADAM

RESEARCH GUIDE

AIMS, PUNE


Social media is a group of Internet-based applications that

build on the ideological and technological foundations of

Web 2.0, and that allow the creation and exchange of user-

generated content. [2].

Social media differentiates from traditional media in many

aspects such as quality reach, frequency, usability,

immediacy and permanence. According to Danah Boyd the

four properties that differentiate social networking from

any other form of communication are Persistence, Search

ability, Replicability and Invisible audiences: [3]. These four

Properties can be advantage or limitation of the social

media.

The students and teenagers use the social media for various

reasons few of the can be as follows :

Socializing or “hanging out” with their friends, for the most

part friends at school.

Day-to-day news about their f r iends,

acquaintances, relatives, and peer groups

Collaborating on school work

Validation or emotional support

Self-expression and the identity exploration and

formation that occurs in adolescent development

What sociologists call “informal learning,” or

learning outside of formal settings such as

school, including learning social norms and social literacy

Learning the technical skills of the digital age,

which many businesspeople feel are essential to

professional development

Discovering and exploring interests, both academic

and future professional interests

Learning about the world beyond their immediate

home and school environments

Civic engagement – participating in causes that are

meaningful to them. [4]

2 FORMAL THEORY OF SOCIAL NETWORKS

Social Network :(social sciences) A network (g)is defined as

a set of actors (or agents, or nodes, or points, or vertices)

that may have relationships (or links, or edges, or ties) with

one another.

Let A be the set N = {1,,n} of individuals (actors) , who are

connected in a network relationship, then

ij represents the link {I, j}

ij g indicates that i and j are linked under network g

G = {g gN} denotes the set of all possible networks or graphs

on N, with gN being the complete network g + ij : network

obtained by adding link ij to an existing network g

g - ij : network obtained by deleting link ij to an existing

network g

N(g)={I| j s.t. ij g} : set of individuals who have at least one

link in network g

Density = cardinality of (g) / ( n*(n-1) )

In its simplest form, a social network is a map of all of the

relevant ties between the nodes being studied. The nodes in

the network are the people and groups while the links show

relationships or flows between the nodes. Social network

analysis provides both a visual and a mathematical analysis

of complex human systems[7].

In addition to the use of relational concepts, the following

concept or assumptions are important :

Actors and their actions are viewed as inter

dependent rather than independent, autonomous

units

Relational ties (linkages) between actors are

channels for transfer or "flow" of

resources (either material or non-material)

Network models focusing on individuals view the

network structural environment as providing

opportunities for or constraints on

individual action

Network models conceptualize structure (social,

economic, political, and so forth) as lasting

patterns of relations among actors.

The unit of analysis in network analysis is not the

individual, but an entity consisting of a collection


of individuals and the linkages among them. Network methods focus on dyads (two actors and their ties), triads (three

actors and their ties), or larger systems (subgroups of individuals, or entire networks. [7].

Social network analysis has application in diverse fields like sociology, Anthropology, biology, communication studies, economics,

geography, information science, organizational studies, social psychology, sociolinguistics etc. social network analysis play a

critical role in determining the way problems are solved, organizations are run, and the degree to which individuals succeed in

achieving their goals. Of all the applied fields, national security is probably the area that has most embraced social network

analysis. Crime-fighters, particularly those fighting organized crime, have used a network perspective for many years, covering

walls with huge maps showing links between “persons of interest.[8]. Educational institute can take benefit from the all social

network analysis.

2.1 SMALL WORLD EFFECT (SIX DEGREE OF SEPARATION)

Six degrees of separation is the theory that everyone and everything is six or fewer steps away, by way of introduction, from any

other person in the world, so that a chain of "a friend of a friend" statements can be made to connect any two people in a

maximum of six steps. (i.e. maximun geodesic distance between any two nodes is six. Not a coincidence first social networking

site was named as sixdegrees.org

2. SOCIAL MEDIA IN EDUCATIONAL INSTITUTES

According to survey conducted by Comscore [5] in July 2010, There are more than 33 Million internet users in India, out which 84

% visit social networking sites, Most of the user are between age group of 15 to 24. Some institute allow free usage of social

networking sites while most of the institute does not allow social media using through institute infrastructure. However students

are surfing these sites either at their residence, through mobile or portable devices. Some students even go to the bypassing or

Sr. No

Researchers

Year

Methods

Findings

1

Ithiel, de Sola Pool (political Science) Kochen Manfred (Mathematics)

1978-79

Statistics And graphs

U.S.-sized population without social structure, "it is practically certain that any two individuals can contact one another by means of at most two intermediaries

2 Michael Gurevich 1973 Monte carlo simulations more realistic three degrees of separation existed across the U.S. population

3 Travers, Jeffrey and Milgram 1969 Small word technique the mean number of intermediaries observed was greater than five

4 Duncan Watts 2001 Experiments with email, the average (though not maximum) number of intermediaries was around six.

5 Jure Leskovec and Eric Horvitz 2007 Examination of dataset of 30 billion conversations among 240 million people.

average path length among Microsoft Messenger users tobe 6.6

6. Reza Bakhshandeh, Mehdi Samadi, Zohreh Azimifar, Jonathan Schaeffer

2011 Optimal search Algorithm an average degree of separation of 3.43 between two random Twitter users

7 Facebook data team document that amongst all Facebook users at the time of research (721 million users with 69 billion friendship links) there is an average distance of 4.74, 99.91% of Facebook users were interconnected, forming a large connected component.

8 social media monitoring firm Sysomos,

2010 the average distance on Twitter is 4.67. On average, about 50% of people on Twitter are only four steps away from each other, while nearly everyone is five steps or less away

9 Adamic, L. A., Buyukkokten, O. and Adar, E

2003 Small word phenomena exist in online social network

10 Mislove, A., Marcon, M., Gummadi, K. P., Druschel, P., and Bhattacharjee, B

2007 Existence of power law and small world in online social network


breaking the security barrier like firewall etc. Not allowing usage of social networking altogether is not solution. Social media has

become a part of teenage life, what is need is to the benefit of social media while overcoming its challenges.

When it comes to social media , it is important to avoid the extremes. Allowing full access with no restrictions is dangerous.

However banning social media is also bad decision , it will create new risk as the users will find ways to do it without the IT staff's

knowledge or protection. [6].

Institute should educate the students and employees about what they should do and should not do on social media. Teach them

about potential benefits and dangers of social media. Institute can develop its own social media policy, as it exists in many

universities, government and business organizations. Realizing the power of social media, Department of Information Technology,

Ministry of Communication and Information Technology, Government of India, Formulated Framework and guidelines for use of

social media in government organization in September 2011 in order to encourage and enable government agencies to make

effective and efficient use of this use of Social Media by government agencies.

Educationist and researcher in different parts of world, have conducted survey regarding social networking sites usage amongst

students, the common finding were, More than 60% of the student spent more than 2 hrs per day on these sites [9,10, 11,12], these

sites were used for more for social communication, relationship building as compared to Academic communication and Learning,

[9,10,,10,12, 13, 14].

4. CURRENT RESEARCH

In the current research a survey instrument was designed in Google forms to extract information about use of social media in

education during the period . This questionnaire was mailed to 1200 respondents, and they were asked to forward this

questionnaire to their references, snowball sampling was used 92 responses were received. The URL of the site of questionnaire

was posted on the wall of two social networking Sites Face book and LinkedIn., the 7 persons responded.

The 99 respondents can be categorized on the basis of their demographic profiles as follows :

TABLE 2 : DEMOGRAPHIC PROFILES OF THE RESPONDENTS

No of respondents

Demography of users

Profession of the user

Teacher

43

Student

29

Industry

27

Educational background

UG

34

PG 59

PhD

6

Gender

Male

70

Female

29

Age Young 91

Old 8


THE OPINIONS GIVEN BY THE DIFFERENT GROUPS OF USERS ARE GIVEN IN TABLE NO 3

From the above we can conclude that most of the users are positive opinion about use of social media in education.

Should youth use social

media

Should student and teacher be friends on

Social media Can Social media be used in education?

Profession of the user

Teacher Yes 31 21 33

No 7 6 2

cant say 5 16 8 Student

Yes 15 17 22

No 6 4 33

cant say 8 8 4 Industry

Yes 18 19 24

No 6 4 2

cant say 3 4 1 Education UG

Yes 20 17 25

No 7 7 5

cant say 7 10 4 PG

Yes 43 38 49

No 8 7 2

cant say 8 14 8 Phd

Yes 3 2 5

No 2 0 0

cant say 1 4 1 Gender Male

Yes 46 48 58

No 11 5 4

cant say 13 13 8 Female Yes 20 9 21

No 6 9 3

cant say 3 15 5 Age Young

Yes 61 52 71

No 15 13 7

cant say 15 26 13 Old

Yes 5 5 8

No 2 2 0

cant say 1 1 0 All users

Yes 66 57 79

No 17 14 7

Cant say 16 28 13


5. SUGGESTIONS FOR USING SOCIAL MEDIA FOR THE BENEFITS OF THE ORGANIZATION

There are different stake holders in educational institution, social media can beneficial for each of them. These stake

holders can utilize the social media in way suggested in Table No 4.

Stake-holder Suggestion Benefits benefits Derived Administration (Management)

Creating Institute own social media paged

This page/channel should Managed and administered by public relations or communication department of the institute, Trust or Institute

Institutions ‘s Brand Building in low cost Attracting Potential students Student Relation Management (SRM-Alumnis) Recruitment Getting feedback/complaints from students,

staff, parents etc Finding potentials of current employees, Innovation Competitive advantages Collaboration with other organization,

Institutions, NGO & Govt agencies Teachers/ Faculties Use of Social media by

teachers in teaching and communication

Separate Professional account should be maintained and must not be mixed with personal accounts

Multi-Modal Teaching Student Mentoring Creativity & Innovation Distance education Informal communication Connecting with researchers and Professionals in

the respective domain Students Use of social media as an

educational and communication

Students must be made aware about the potential benefits and threats before actually using social media.

Self Learning (st udents learn on their own how to manipulate this media)

Network Learning (communicating in such a way so as to support one another's learning)

Sharing of Educational and other resources Facilitates inter culture and intra cultural

communications Customized to suit learners’ learning style Improved student teacher & student student

Communication Employment opportunities Working on collaborative Projects (diminishing

time and space barriers) Encouragement of self expression (for those who

cannot express) Improvement of learning outcome Helpful for students with learning difficulties Exposure to global culture

REFERENCES

1. Ahlqvist, Toni; Bäck, A., Halonen, M., Heinonen, S (2008). "Social

media road maps exploring the futures triggered by social media".

VTT Tiedotteita - Valtion Teknillinen Tutkimuskeskus (2454): 13.

2. Kaplan Andreas M., Haenlein Michael, (2010), Users of the world,

unite! The challenges and opportunities of social media, Business

Horizons, Vol. 53, Issue 1 (page 61)

3. Danah Boyd, (2008) Why Youth Social Network Sites: The Role of

Networked Publics in Teenage Social Life -, University of

California, Berkeley, School of Information The MIT Press,.

119–142)

4. Anne Collier and Larry Magid “ A Parent's Guide to Facebook

(revised 2012), ConnectSafely.org February 2012

5. http://www.comscore.com/Press_Events/Press_Releases/2010/

8/Facebook_Captures_Top_Spot_among_Social_Networking_Site

s _in_India

6. Enabling Social Networking Applications for Enterprise Usage, A

SANS Whitepaper – December 2010 Written by Eric Cole, PhD

7. Wasserman, S. ,K. Faust, (1994) Social Network Analysis.

Cambridge: Cambridge University Press.

8. Stephen P. Borgatti, Ajay Mehra, Daniel J. Brass & Giuseppe

Labianca Network Analysis in the Social Sciences, Sciencemag.org


9. Justo de Jorge Moreno USING SOCIAL NETWORK AND DROP BOX IN

BLENDED LEARNING : AN APPLICATION TO UNIVERSITY EDUCATION,

Business, Management and Education 2012.

10. Keith Kirkwood, The SNAP Platform : social networking for

academic purposes Melbourne, Australia, Campus-

Wide Information Systems Vol. 27 No. 3, 2010 pp. 118-126

Emerald Group Publishing.

11. Shailja Agarwal, Monika Mital, AN EXPLORATORY STUDY OF INDIAN

UNIVERSITY STUDENTS' USE OF SOCIAL NETWORKING WEB SITES:

IMPLICATIONS FOR THE WORKPLACE, BUSINESS COMMUNICATION

QUARTERLY / March 2009.

12. Youmei Liu, Social Media Tools as a Learning Resource, Journal of

Educational Technology Development and Exchange, 3(1), 101-

114.

13. Ajagbe Akintunde Musibau, 2Eluwa Stephen Eyinnaya, Duncan

Edward E, Mkomange Claud Wantrudis, Lasisi Ayodele Nojeem,

THE IMPLICATIONS OF SOCIAL NETWORKING SITES IN EDUCATION IN

NIGERIA, INTERDISCIPLINARY JOURNAL OF CONTEMPORARY

RESEARCH IN BUSINESS Nov 2011 Vol.3 No. 7.

14. Ken Zula, Karen K Yarrish , walter Pawelzik, An Analysis of the

Difference between student age and social networking utilization

within A school of business, Americqal journal of businesses

education, sept 2011, 4,9, pg37.


GENERAL

MANAGEMENT

I. INTRODUCTION

he first experiment of conducting quizzes using Moodle, an Open

TSource Learning Management System has been carried out at MCE

Society's Allana Institute of Management Science for MCA and

MCM course. Both the courses are approved by AICTE and UGC. MCA

course is of 3 years having two semesters each year. Each semester has six

subjects whereas MCM is of 2 years having two semesters each year. Each

semester has five subjects.

Moodle offers a wide variety of teaching tools [1, 3]. One of these tools is

quiz module. Quiz module represents an alternative to traditional face-

to-face courses and paper-based testing.

The aim was to elaborate power of Moodle quiz, to make use of Moodle

question pools and to design, implement and assess a series of quizzes.

The purpose of this study, therefore, was to examine the quality of our

MCA (II & III) and MCM (II) multi disciplinary true/false-type, MCQ tests,

and to see if there was any relationship between the item difficulty index

and the item discrimination index values in these MCQ tests.

II. LITERATURE REVIEW

Psychometric analysis is formal, structured exercises designed by

psychologists to measure psychological qualities such as reasoning ability

and personality factors. [4]

Prof. John Rust [5] recommended that Psychometric analysis needs to be

carefully researched and tested to ensure that they are fair, reliable and

valid, allowing results to be compared with people who have taken the

tests before.

“A STUDY OF MOODLE : OPEN SOURCE

LEARNING MANAGEMENT SYSTEM WITH

REFERENCE TO IT’S APPLICATION IN

TEST / EXAM MANAGEMENT”

PROF. SHEETAL UPLENCHWAR

ASSISTANT PROFESSOR,

AIMS, PUNE


According to McHenry [6] companies spend millions of

pounds a year on psychometric tests to measure personality

types, learning styles and the personal preferences of their

employees. His study states that the value of psychometric

tests sold every year to UK organizations is more than £20

million and that in 2003 they were used in most of the public

sector.

According to Zemke. R. [7], in the United States, the value of

sales of psychometric tests and inventories for recruitment,

team and personal development is in excess of 100 million

US dollars per year.

McCann.J. [8] has suggested use of Psychometric tests in the

growing arena of offender profiling and forensic science. He

has also suggested psychometric tests can be used for

classification of types of offender.

Hardingham, A and et.al [9] have used Psychometric tests in

coaching. They described positive impact of psychometric

tests for starting a coaching conversation and understanding

differences.

In UK psychometric test has been conducted for recruitment

process of train drivers. They used psychometric tests for

Training and development, Post trauma counseling, Pre-

incident counseling, Post incident investigation. [10]

Study reveals that test use in the first two of these was

sensible and conforms to good practice whereas it caused

problem in pre-incident counseling and post incident

investigation. [10].

III. NEED OF PSYCHOMETRIC TESTING

It is difficult to predict a description of teaching that does

not accord assessment as an essential role. Teachers need to

continually collect, synthesize, and interpret information

about their students' learning, state of knowledge and skills

before they can begin to plan instruction.

According to Airasian and et.al [11] as instruction proceeds,

it is necessary to collect evidence to reach to conclusion that

whether students are learning or not. This evidence is based

on teachers' own observations and monitoring of students in

the classroom.

These evidences are used for a variety of purposes like to

plan future instruction; to adapt teaching to learning styles,

skills, interests, and motivations of students; to provide

feedback and incentives; to place students in instructional

groups; and to diagnose problems that students may be

experiencing.

Black & Wiliam [12] have conducted research in examining

how the assessment capacity of teachers might be enhanced

to improve student learning. They suggested approach to

shift teacher dependence for assessment information and

standardized tests should be based on psychometric models.

IV. PSYCHOMETRIC TEST CONSTRUCTION

Psychometric tests are used to describe the domain or

construct, to check ability, body of knowledge, set of skills.

Bloom [13] has recommended requirement in the

construction of a psychometric tests, should involve a

review of curriculum documents, instructional materials,

and textbooks. This review process enables to represent the

domain in the form of table specifications or a blueprint.

Bloom [13] have suggested that it is extremely important

that the tasks/questions selected for the test need to

acquire curriculum area, even if test contains only a small

sample of the knowledge and skills.

According to Ferrao[15], the e-assessment system provide a

set of tools to analyze the reliability of the tests and,

consequently, to ensure the quality of the system.

Psychometric analysis is a great tool for assessing whether

the quizzes are a reliable instrument for measuring the

students' performance, attitudes and abilities. So all test

must provide an adequate representation of the curriculum.

Otherwise, it is not possible to predict student's

performance if it is based on the test.

Rust and et.al [14] have suggested principles of

psychometric study like Reliability -freedom from error,

Validity, Standardization, Equivalence.

V. RESEARCH METHODOLOGY

This research work focuses on to analyze students' answers,

to carry out a psychometric analysis i.e. measurement of

knowledge, abilities, attitudes, and to identify the

appropriateness of the questions stated in the quizzes.

This pilot study focuses on the set of Moodle's quiz module.


Moodle's quiz module have several types of questions like multiple-choice questions, true/false, short-answer questions,

numerical questions, matching questions and embedded answer questions. The GIFT format was used for the creation of quiz.

PRIMARY DATA

With reference to above line, we carried out experiment at Allana Institute of Management Sciences for MCA course, The quiz was

conducted for MCA (II Year - Semester III) and MCA (III Year - Semester V) for each subject.

SAMPLE SIZE

Semester wise and subject wise total number of students those who have appeared for test are given in the table below.

TABLE 1 : STATISTICS OF QUESTIONS AND QUESTION TYPES FOR MCA-III (SEMESTER- V)

TABLE 2: STATISTICS OF QUESTIONS AND QUESTION TYPES FOR MCA-III (SEMESTER- V)

Question Types / Total no. of questions asked

Subject Name

MCQ

T/F

Desc

ripti

ve

Num

eri

cal

Tota

l. N

o

Att

ended

Students

Software Project Management

25 25 NIL NIL 54

Human Computer Interface

38

22

NIL

NIL

53

Application Development Tech 57 NIL NIL NIL 66

Emerging Trends in

Information Tech 48 1 NIL NIL 66

Programming Language

Paradigm 20 NIL NIL NIL 60

Advance Internet Technology

Advance Unix

41

NIL

5

NIL

NIL

NIL

NIL

13

66

5

Question Types / Total no. of questions asked

Subject Name

MCQ

T/F

Desc

ripti

ve

Num

eri

cal

To

tal.

No

Att

ended

Students

Web Support Technologies

42 NIL NIL NIL 96

Research Methodology

16

9

NIL

29

78

Data Communication & Network 60 NIL NIL NIL 111

Data Structure using C++ 43

NIL

NIL

NIL

110

Advance Database Management System 28 31 1 NIL 88

NIL

Object Oriented Analysis & Design 57 NIL

NIL 42


VI. EXPERIMENTAL RESULTS

Psychometric analysis is carried out with the help of item analysis report which gets generated by Moodle. Item analysis is the

process of collecting, summarizing and using information from students' responses to assess the quality of test items. Difficulty

index (P) and Discrimination index (D) are two parameters which help evaluate the standard of MCQ questions used in an

examination.

It has attributes like question type, question name, question text, partial credit, R count, R%, Correct facility, Discriminative

Index. The Definition of the attributes are given in the table below :

TABLE 3: ITEM ANALYSIS ATTRIBUTES

The Table below shows value of Facility index / Difficulty Index F (or Software Project Management System(SPM) subject.

TABLE 4: STATISTICS OF FACILITY INDEX AND DISCRIMINATION INDEX FOR SPM

It is observed from the table that only 16 questions and 3 questions were mistyped or may be ambiguous.

Range of Facility Index/

Difficulty

Index

Total No. of

Questions

Facility Index/ Difficulty Index

Level

Discrimation

Value

Total No. of

Questions

Discrimation

Level

<=30 16 High

(difficult) Negative Values

3

Miskeyed question/ ambiguous question

/confused question.

>=30 and <80 38 Moderate 0 to 0.2 16 Not Discriminating well

>= 80 43 Low 0.4 and above 63 Good dicrimation

Term Description Example

Partial Count

Credit that student receives for the attempted question.

Correct Ans : Assigned credit Incorrect Ans : 0

R Count

Total No. of students those who have selected specified response.

-

Specified as n/m. e.g. 10/15.Out of 15 students, 10 studentshave selected given response.

R%

It is n/m*100 If R count is 10/15, then R% is

67%.

Correct Facility /Facility / Difficulty

Index(FI/P)

Percentage of the total group who have responded correctly to the item.

Out of 15 students, if 10 students has answered correctly the FI = 67%.

Discrimination index(d)

Difference between the percent of correct responses in the upper group and the percent of correct responses in the lower group.

- D = (UG LG)/ n


CONCLUSION

Moodle quizzes can be considered as a convenient and

interesting tool to inform students of their performance

throughout the learning process. From this first and positive

experience regarding the use of the Moodle quiz module, we

intend to generate improved quizzes suitable enough for

assessing the teaching and learning of the subject.

Moodle quizzes also help to reduce various tasks like

supervision of examination, checking of question papers and

unbiased checking and also help teachers to organize,

manage and deliver course material.

MCQ items that demonstrate good discrimination tend to be

in the moderately easy to moderately difficult. range. On the

other hand, items that are in the moderately difficult to very

difficult range are more likely to show negative

discrimination. The wide scatter of discrimination needs

further investigation, and before we discard an MCQ for poor

discrimination, we must first look into the factor(s) that may

contribute to such poor discrimination.

REFERENCES

[1] Paul Kavangh, “Open Source Software Implementation &

Management”, Elsevier Digital Press, 2004, ISBN: 1-55558-320-2.

[2] Moodle Statistics, “https://moodle.org/stats/”, last accessed on th 24 Aug 2013.

[3] Cole, J. (2005), “Using Moodle's teaching with the popular open

source course management system”, Sebastopol (CA): O'Reilly

Community Press.

[4] Psychometric Analysis, “http://www.hw.ac.uk/careers/info/ th psychometric.pdf”, last accessed on 19 Aug 2013.

[5] Prof John Rust, “Psychometrics in Context: Test Construction”,

University of Cambridge, The Psychometric Center, last accessed rd on 23 Aug 2013.

[6] McHenry, Dr. R. (2003), “How to use psychometrics effectively”,

http://www.opp.eu.com/public/media/pdfs/Using%20psychometh tric%20tools%20effectively.pdf”, last accessed on 18 Aug 2013.

[7] Zemke, R. (1992), 'Second thoughts about the MBTI', Training, April th 1992, v29, n4, 43-48, last accessed on 18 Aug 2013.

[8] McCann, J. (1992), 'Criminal Personality Profiling in the

Investigation of Violent Crime: Recent Advance and Future

Directions', Behavioral Sciences and the Law, Vol. 10, 475-481.

[9] Hardingham and et.al. (2004), “The Coach's Coach: Personal

Development for Personal Developers”, London: CIPD.

[10] Psychometric Testing - A review of the train driver selection

process, “http://www.rssb.co.uk/SiteCollectionDocuments/

pdf/reports/Research/T340_rpt_final.pdf”, last accessed on17th

Aug. 2013.

[11] Airasian, P.W., Kellaghan, T., Madaus, G.F., & Pedulla, J.J. (1977),

“Proportion and direction of teacher rating changes of students

progress attributable to standardized test information.” , Journal

of Educational Psychology, 69, 702-709.

[12] Black, P and et.al (1998), “Assessment and classroom learning

.Assessment in Education,” 5, 7-74.

[13] Bloom, B.S. (1969), “Some theoretical issues relating to

educational evaluation: New rules, new means”. 68 Yearbook of

the National Society for the Study of Education, Part II. Chicago:

NSSE.

[14] Rust, J. & Golombok, S. (2009), “Modern Psychometrics (3rd

Edition): Taylor and Francis: London”.

[15] Ferrao, M. (2010). “E-assessment within the Bologna paradigm:

evidence from Portugal”. Assessment & Evaluation in Higher

Education. vol. 35, no 7, pages 819-830.


GENERAL

MANAGEMENT

INTRODUCTION

cDaniel C (2009, pp 231) says that within a market, a market

Msegment is a subgroup of people or organizations sharing one

or more characteristics that cause them to have similar

product needs. At one extreme, we can define every person and every

organization in the world as a market segment because each is unique. At

the other extreme, we can define the entire consumer market as one

large market segment and the business market as another large segment.

All people have some similar characteristics and needs, as do all

organizations.

Market segment is therefore the process of identifying different groups of

users within market who could possibly be targeted with separate

products or marketing programmers. The concept has its origins in early

economic theory, where it has long been established that demand is

linked to the level of competition and to pricing, but it was Smith (1956)

who first extended the link to user differences.

According to Malcolm McDonald (2004, pp2) most companies

acknowledge the existence of segment of customers with similar needs

and market more than one group of customers. Many successful

companies attribute their success to identifying and meeting the needs of

certain kinds of customers. Few companies have the resources to offer

different products to all customer segments in a particular market.

Instead, they concentrate on the most lucrative or beneficial segments.

Joseph H Hair (2008, pp 213) says that market segmentation plays a key

role in the marketing strategy of almost all successful organizations and is

a powerful marketing tool for several reasons. Most important, nearly all

markets include groups of people or organizations with different products

“CHANGES IN THE FOCUS OF PARAMETER

OF MARKET SEGMENTATION IN AUTOMOBILE

INDUSTRIES IN INDIA”

ALI ASGHAR TABAVAR

PH. D., RESEARCHER,

PUNE UNIVERSITY, INDIA


needs and preferences. Market segmentation helps

marketers define customer needs and wants more precisely.

Because market segments differ in size and potential,

segmentation helps decision makers to more accurately

define marketing objectives and better allocate resources.

In turn, performance can be better evaluated when

objectives are more precise.

SEGMENTATION OF AUTOMOBILES IN INDIA

CURRENT SCENARIO

India is considered as one of the emerging automobile

markets since the launch of its first car in the year 1897, in

Mumbai.

India has one of the fastest growing automobile sectors in the

world today, with a cumulative growth rate exceeding 16%

for number of cars produced. Similarly in 2003-2004, the

commercial vehicle segment grew at 22%, and the two-

wheeler in demand for automobiles in the home market,

through the role of export is ever increasing. Today, India the

second largest populated country is ranked the sixteenth

largest automobile market in the world. The growth rates

suggest that India will be one of the largest markets in a few

decades.

According to Robbins Stephen P(2009) Indian automobile

manufacturers are building themselves up to make a gigantic

impact on the global auto manufacturing scene by leveraging

strong skill sets in engineering and manufacturing and their

equally strong balance sheets to build markets.

According to the Automobile Components Manufactures in

India (ACMA, 2006), India has the fourth-largest passenger

vehicles market in Asia, the second-largest two-wheeler

market in the world, as well as the fourth-largest tractor and

fifth-largest commercial vehicle market worldwide. The

vehicle market segments in India, with a total production

volume of 8.46% three wheelers, and 4% commercial vehicles

(ACMA, 2006).

According to World Bank data The Indian market is not

penetrated well in terms of car ownership. In countries like

the U.S., penetration level is 812 cars per thousand, but in

India, it is 18 cars per thousand of population which is lower

than even countries like Sri Lanka and Bangladesh.

Price based classification is widely accepted in the India

passenger car industry (Vibha Pingle, 1999) says that. Indian

customers are more likely to choose a car based on their

income, aspiration levels and lifestyles. Car sectors are

popularly segmented on the basis of the prices as shown.

Segment A – Cars Priced lower than Rs. 300,000

Segment B – Cars Priced Between Rs. 300,000 and Rs.

500,000

Segment C – Cars Priced Between Rs. 500,000 and Rs.10,

00,000

Segment D – Cars Priced Between Rs. 10,00,000 and Rs.

25,00,000

Segment E – Cars priced above Rs. 25,00,000.

SEGMENTATION OF AUTOMOBILE MARKET IN INDIA

Indian Automobile industry which was initially focusing

exclusively on family segment for a long time encountered a

change when Tata Sierra brought in a new segment by name

Sports utility vehicle (SUV) segment. The SUV segmentation

which was a failure in its initial stage has gained recognition

from customers today. However, Indian car market is family-

oriented to a great extent. Unlike countries like US in which

each person owns a car, normally Indians own a single car per

family. Hence, automobile marketers in India concentrate

on attracting the whole family towards their product rather

than an individual.

Saxena (2009) says that the Indian automobile industry has

come a long way from the days of the ambassador, premier

and standard cars and Bajaj and Lambretta two wheeler

scooters.

With the changing preferences of consumers India is today

the fourth largest car market in Asia. Topmost manufactures

from foreign countries have started entering into the Indian

automobile market. For years, demographic and income and

family segmentation were the principal modes of

segmenting automobile markets. Today many marketers

have begun to expand the segmentation strategies by

creating new profiles in automobile segment such as sports

utility vehicle segment, multi utility vehicle segment,

hatchback segment, small car segment etc.


LITERATURE REVIEW

According to Stanton (2005) market segmentation consists of

taking the total heterogeneous market for a product and

dividing it into several sub markets or segments each of

which tends to be homogeneous in all significant aspects.

Kotler (2001) says that Market segmentation is the sub

dividing of a market into homogeneous subjects of customers

where any subset may conceivably be selected as a market

target to be reached within a distinct marketing mix. The

power of this concept is that individual sellers may prosper

trough creatively serving specific market segments whose

needs are imperfectly satisfied by the mass market offerings.

Ronald hasty and others argue that segment markets simply

divide the heterogeneous mass market into groups each of

which has one or more homogenous characteristics the

number and nature of which depends on the purposes and

imagination of the analyst. For example an industrial market

might be segmented as follows (1) By size of customer large

medium and small accounts in terms of purchases number of

employee's sales volume or other measures (2) By geographic

area (3) By method of distribution (4) By standard industrial

code (5) By amount of technical service required (6) By

reasons for buying and benefits derived from use and (7) By

nature of buying decision process. Market segmentation is a

method for achieving maximum marker response from

limited marketing resources by recognizing differences in the

response characteristics of various parts of the market (Clay

Camp H J, 1965; Brody R P and Cunningham S M, 1968). It is a

strategy of divide and conquer that adjusts marketing

strategy to inherent differences in buyer behavior. These

definitions show that market segments are grouping of

buyers who have common features as buyers of a product or

service so that their needs can be well served.

SEGMENTATION AND THE AUTOMOBILE INDUSTRY

Peters (1970), has proposed a variable called “relative

occupational class income”, where in, he analyses “the

relationship of a family's total income to the median income

of other families in the same occupational class”. His findings

showed that this variable could be used to show a more

generalized variation with regards to car purchases but not to

differentiate at a more micro level.

Sukhdial et al. (1995) suggested a method of segmentation

where they attempted to show the effect of values on the

purchase of luxury cars. Their reason for conducting the

study was that they thought luxury cars were purchased for

value expressive reasons just like other luxury products that

are conspicuously consumed. The findings showed that the

owners of luxury cars did differ in terms of values. They were

even able to attribute the values to luxury car owners based

on the car's country of origin. They were able to correctly co-

relate values with car owners in sixty five percent of the

cases.

Goodyear (1996), suggests that products must be different

as compared to other options available in the market and be

able to provide the consumer with an identity so as to allow

consumers to spot the product from amongst competing

brands. Keller (1993), says that it may not be easy to define

what luxury is for the simple reason that what may be luxury

for one consumer, may not be for another consumer.

“The Society of Motor Manufacturers and Traders Limited

(SMMT) classify cars into nine segments: mini, super-mini,

lower medium, upper medium, executive, luxury saloon,

specialist sports, dual purpose, and multipurpose vehicle

(MPV). Amongst these, one can notice that there is the

separate segment namely 'luxury saloon'. However, this may

not describe the whole aspects of luxury cars”, Anurit et al.

(1999). Which is to say, that luxury car manufacturers

produce luxury cars of various prices. They remain luxury

cars as long as they highlight the owner's status irrespective

of the price.

Fusile (1989), says that “the automobile industry has sold

cars in terms of everything other than the real function,

which was personalized transportation. Cars were sold

based on speed, on power, sex appeal, luxury, safety,

reliability, economy of operation and, obviously, price.”

Essentially Fusile is saying that cars have been sold based on

the values that people consider important based on their

varying personalities. Also, he says, that the advertising for

automobiles has been so effective that they have become

symbols for peoples lifestyles and values. So much so, he

says, that at one point of time “a college professor would

rather forfeit his tenure than be seen driving a Cadillac”.

According to him, segmentation in the automobile industry

today, is not just about studies, tests and focus groups.

Marketers need to look above and beyond mere

demographics, to find out the reasons as to why consumers

care, or for that matter do not care for their product. It

involves finding certain commonalities between the

consumers' lifestyles and the product being marketed, and


this is how market segmentation should be done.

Riesman et al. (1950, Revised - 2001), in their book 'The

Lonely Crowd', has developed a theory, which divides human

beings into three distinct categories based on the stage of

development of the society to which they belong. They have

thus divided the human population into “Tradition Directed”

people, “Inner Directed” people and “Other Directed”

people. They say that people, who are tradition directed,

largely belong to underdeveloped or developing countries

and are largely guided by the actions of the past, or

predecessors. With regards to inner directed people, they

say that the action of such people is based on their own

individuality and that they are not affected by what others

think. The other directed people they say, are people to

whom other's opinion matters. They wish to blend in and try

to keep up with those around them. Based on these three

states, he has tried to analyze people's behaviors.

Kassarjian (1962), based on the theory of Riesman, tried to

find a relation between various demographic variables and

the inner other directedness approach. His findings showed

that there was no co-variance sex, age, education, marital

status or any other demographic variable, and the inner

outer directedness.

SEGMENTATION AND THE INDIAN AUTOMOBILE INDUSTRY

“In 1991, the Government of India embarked on an ambitious

structural adjustment program aimed at economic

liberalization, based on the pillars of De-licensing,

Decontrol, Deregulation and Devaluation. Post-

liberalization, the Government of India's new automobile

policy announced in June 1993 contained measures, such as

de-licensing, automatic approval for foreign holding of 51% in

Indian companies, abolition of phased manufacturing

program, reduction of excise duty to 40% and import duties of

'Completely Knocked Down units (CKD)' to 50% and of

'Completely Built Up units CBU' to 110%, and commitment to

indigenisation schedules. The Government of India's new

automobile policy attracted a large number of automobile

companies to India”. As a result, there were a number of

international companies that were jockeying for entry into

the country. International heavies like General Motors and

Ford, thus gained entry into the then modest, Indian

automobile industry. Today, multi-national companies are

using India as a manufacturing “base for exporting vehicles to

other countries”. The growth rate of the Indian automobile

industry is well over 25 %, which is enormously larger than

other developing countries like Korea and Brazil .Mukherjee

(1997).

By the April of 1996, there were about eighteen automobile

companies that had either begun operations in India or were

in the process of launching in the country. As a result, while

initially there were only about three vehicles to choose

from, consumers now have wide variety of options.

Mukherjee and Sastry(1996).

Rathore and Swarup (2006), have estimated that the current

sales of vehicles in India is roughly around one million units

per annum. However, they say that this level of sales is

“abysmally low” of one were to take into account other

developing countries such as Pakistan and Sri Lanka where

the penetration level is still higher. The penetration level in

India is substantially low at seven cars per one thousand

people. They thus say, that even at the level of one million

units per annum, “this is just the tip of the iceberg”.

Mukherjee (1997), says that the automobile industry of India

is still in the process of evolution and growth. As a result, the

segmentation techniques used are not very refined or

evolved unlike the western countries. “There has hardly

been any kind of segmentation on psychographic or

behavioral parameters as seen in developed car markets.”

He further says that the “segments are quite different from

the segments known in the US, European or Japanese

markets.” The segmentation process, he says, is done

largely on the bases of the product type or the price range

the product fits into. Further, he found that there was a very

substantial difference in demand between “the four

geographical regions” of the country. This goes to show that

there is such diversity between the geographical reigions of

the country that product preference tends to differ. This is

so prominent, that companies can use geographical

segmentation in the initial process of segmentation. As a

testament to the geographical diversity, Mukherjee (1997),

has said that “North India is the largest market for cars in

India currently with 43% market share. Next come west with

27% and south with 22%. East has the lowest market share at

8%”. Mukherjee and Sastry (1996), have suggested “choice

of target market” as one of the first elements of designing an

“entry strategy”. Going as per the findings of Mukherjee

(1997), it would seem that geographic segmentation might

be an apt first step in doing so.


As per the findings of Mukherjee and Sastry (1996) and

Mukherjee (1997), the current segmentation techniques used

in the Indian automobile industry, are primarily based on the

type or utility of the vehicle and the price range of the

vehicle. In so doing, they have been able to segment the

market into 'Off Road or Utility vehicles', 'Economy segment',

'Luxury Segment' and 'Super Luxury segment'.

However, with scarce research in the Indian automobile

industry, few know what it is that moves the consumers and

how the market should be segmented. Odekerken-Schröder

et al. (2003), says that there are several dimensions that

consumers take into account and attach different levels of

importance to each of those dimensions [38]. Therefore, to

be able to segment the market better and to use their

resources in the most effective manner, manufacturers must

know the dimensions, along with their varying importance,

that consumers take into account.

Rathore and Tilak (2006), have dedicated a substantial

amount of literature to explain the dealership networks of

the various automobile manufacturers in the country. Also,

they have concentrated on the prices offered by the

manufacturers on their products.

Kara, A., and Kaynak, E. (1997) says that from an extreme

perception of cars being an ultimate luxury, today it has

probably acquired the status of necessity to many city

dwellers. In 1960s cars were very expensive and only the

very rich could afford them. The styles available were

limited. Dealer's credits were mainly used to finance car

purchases. A gradual metamorphosis resulted in the

perception of cars being seen as a necessity in upper middle

class families in the 1970s. At this time, an expansion of

dealer networks was witnessed. The 1980s saw the

emergence of the “one car for the family “concept. Though

the market did not offer much choice, style orientation and

design became desirable attributes in a passenger car.

According to James M Rubenstein (2001) Maruti Udyog Ltd,

India's largest car maker in both volume and revenues ($2.2

billion for fiscal 2004-05). It controls 50% of the domestic

passenger car market share, selling half a million cars a year,

with the bulk of its offering comprising the smaller compact

vehicle. But it may look a lot different in the future, as it has

begun to seek an increased share of the market for premium

vehicles.

Only high sales of a product allow companies to cover their

high investment costs. Bauder H (2001) says that this is a

problem faced by every new entrant, be it an altogether new

company or be it a new model being introduced by an

established brand. Thus, a minimum economic size will be

required for the justification of launching a new product,

even to gain a foothold in the market.

The concept of high sale has been discussed, which shows

that today companies should think of new bases to segment

their products.

According to Anderson (2008) an important consideration in

defining the market to be segmented is estimating the

variation in buyer's needs and requirements at the different

product-market levels and identifying the types of buyers

included in the market. In the atlas Air example,

Management defined the product-market to be segmented

as air freight services for business organizations between

major global airports, segmentation the generic product-

market for air freight services was too broad in scope.

According to Sahaf M A (2008) The Indian automobile

industry has registered a tremendous growth over the past

one decade and has emerged as one of the most attractive

industries for investment. Once of the major reasons for the

growth of the automobile industry in India has been the

growing markets for different types of vehicles due to

increase in disposable income and standards of living of

middle class families. The growth and potential of such

markets in India has been the growing markets for different

types of vehicles due to increase in disposable of such

markets in India can be judged from the fact that India is the

fourth largest passenger vehicle market in Asia and Fifth

largest commercial vehicle market in the world.

According to Saxena (2009), Indian Automobile industry

which was initially focusing exclusively on family segment

for a long time encountered a change when Tata Sierra

brought in a new segment by name Sports utility vehicle

(SUV) segment. The SUV segmentation which was a failure in

its initial stage has gained recognition from customers today.

However, Indian car market is family-oriented to a great

extent. Unlike countries like US in which each person owns a

car, normally Indians own a single car per family. Hence,

automobile marketers in India concentrate on attracting the

whole family towards their product rather than an

individual.


He further said that with strong, upwardly mobile consumers

group, anti-pollution laws, easy availability of financing

facility at low interest rates, demand for new cars has

increased post 2003. With the expanding market and

enhanced competition in the industry, each manufacturer

has had to decide on the positioning of the car model. Today,

there are three segments in the passenger car segment.

These are economy, mid-sized and luxury car segments. The

economy segment, which is the largest, has been further

divided into the top end and the bottom end. Similarity, the

Mid-sized car segment has been further classified into

premium and non-premium models.

Configuring the sticker price for a car in the market today is

no more a functional decision. It has become a strategic

decision as it identifies the key segment's response elasticity

to the market offer. The two key inhibiting factors for the

poor response to the auto war fare in Indian Car Market are

basically the low per capita income at $350 (Rs 14,000 at

current prices) and the high manufacturing costs. (Panda

Tapan, 2012).

Traffic congestion and bad roads could deter potential buyers

from going for small cars particularly in small cities of India.

The future is not very heartening in this aspect. The market

will consolidate to few segments. The carmaker has to make

diverse models based on diverse and flexible platforms.

Products like the stripped-down economy car, the sports

utility vehicle or the van should be built on the same

platform. For the price-sensitive customers, there can be a

no-frills version; a loaded version for the middle customer

and luxury car manufacturers can target the high-end

customers.

Considering the marketing segmentation in automobile

industries in India from the review of literature based on the

mean value the existing parameter of segmentation in Indian

automobile industries are:

Price, number of seats, value for money, fuel efficiency,

style, parking (size of the vehicle), Convenience and brand

name.

RESEARCH METHODOLOGY

SAMPLE AND PROCEDURE

The data collection method involved in this study was

questionnaire and interviews from customers. Questions

structured including total 26 questions for manager and31

question for customer. Questions including: Dichotomous,

Rank order, Interval scale, multiple choices.

A pilot study was performed by distributing the

questionnaire to 10 customer and 5 managers of automobile

industries in Pune city.

The pilot test was conducted in order to improve the overall

quality of the questionnaire. Based on their feedback,

several minor changes were made to modify the

questionnaires. Self administered questionnaires were

distributed to the customer and managers of automobile

industries they were asked to answer their experience about

segmentation and rank the parameters of segmentation

based on their view of importance.

A total of 200 questionnaires for customer and 100

questionnaires for managers were distributed. Out of them a

total of 155questionnaire of customer and 65questionnaire

of manager has been selected for the purpose of data

analysis. However Out of them 135(with response rate of

67.5%) correct questionnaire of customer and 38(with

response rate of 38%) questionnaire of manager has been

selected for the purpose of data analysis, respondents either

answered the questionnaires incompletely or questionnaires

contained improper answers has been deleted.

THE MEASUREMENT

Multiple item scales were used to measure each construct in

this study. If possible, validated scales from previous

literature were employed after a slight modification. All

scale items were rated on a 5- point Likert scales ranging

from strongly disagree, which is weighted as 1, to strongly

agree, weighted as 5.

RESULTS

GOODNESS OF MEASURE

An Independent sample T-test, cluster analysis and

difference in mean rating was used to test was used in order

to determine the data validity and reliability. Independent

sample T-test we used to study if there is a difference in the

rating provided to reasons that persuades an Indian

consumer to select the vehicle between consumers and

manufacturer. Cluster analysis is used to determine whether

any changes in the clusters between customers and


managers of automobile industries in India, The results of

Independent sample T-test and cluster analysis and is

presented in Tables 1 and 2. All individual loadings were

above the minimum of 0.5 recommended by Hair et al.

(1998). Thus it can be concluded that the measures used in

this study are valid and reliable.

DISCUSSION AND IMPLICATIONS

Based on the finding of this study The factors which persuade

an Indian consumer most to buy an automobile are value for

money, brand name, style ,price, Parking(size of vehicle) ,

number of seats ,recommendation, Advertising (TV, radio,

newspaper etc),convenience, after sales service, durability .

The finding shows that there is a change in the focus of

parameter of segmentation in automobile industries in India,

whereas price range or product characteristics being most

important factor for segmenting automobiles in India, today

price is being lest important factor for most of the customers

as well as manufacture or managers for market

segmentation, this is may due to increase in disposable

income of Indian families.

Even though Indians are more family oriented, but there is a

change on the old concept of having one family car, the result

of this study show that in a family with working child there

are more than one car which leads this to increase in income

level of family.

From the personal interview as well as questionnaire its is

confirmed that congestion, parking and fuel efficiency put an

very important role in changing the focus of parameters of

segmentation in automobile industries in India.

Moreover, the result of this study confirmed the today's

segmentation strategy in India automobile in totally

changed, for success in this scenario in is advisable for Indian

automobile Industries to rethink on the bases of

segmentation and generate current segmentation

parameters.

The results of this study will be useful to the automobile

manufacturer in order to prevent failure in future and in the

case of failure know how to recover it more efficiently in

order to achieve and generate positive relationship with

customer in future. This study also provided empirical

evidence that which shows the changes in the focus of

parameters of segmentation in automobile industries in

India.

In addition to updating their segmentation analyses

periodically and making segment-by-segment invasions

plans, marketers should target markets in a socially

responsible manner in automobile industries.

LIMITATIONS AND FUTURE RESEARCH

The limitations of study are mainly related to the broadness

of the topic under investigation, time constraints, limited

access to information, Within the core processes of

sourcing, this study narrows its scope to focus upon the

sample size is another limitation of this study, The response

rate is another limitation; however, given the complexity

and subject matter, this is considered reasonable.

Based on the findings of this study, further study may be

conducted on the effect of changes on the bases of

segmentation in automobile industries. The finding of this

study will act as platform to conduct future study on the

segmentation strategies. The affect of urban physical

environments such as parking and infrastructure (like roads)

on the bases of segmentation is another scope of study. The

study in depth of some of the parameters of segmentation

which has been changed based on this study, is another

scope for future study. The customer profile and its affect on

the current bases of segmentation may be another study

which can be conducted near future. This study is focused on

automobile sector mainly 4 wheelers, and changes on the

focus of bases of segmentation in this sector other sectors

such as 2 wheeler and 3 wheeler is remains for further study

.The study of changes in the bases of segmentation in the

rural area still remains the scope for further study

.Importance of changes in the bases of segmentation for

Indian automobile industry is another aspect which may

conduct as a research near future.

CONCLUSION

This study investigate the changes in the focus of

parameters of segmentation in automobile industries in

India .based on the response from 138 customer and 38

manager of Indian automobile industries ,we found that in

changing trend of Indian consumers towards purchasing

automobiles, it is no more enough for automobile

manufacturers to rely upon conventional segmentation

bases. Understanding the same automobile marketers is


moving towards changing the focus in segmentation bases.

Customer capabilities have become a worthwhile basis of

segmentation when customers vary significantly in what

competencies they posses, and what knowledge and skills

they want suppliers to provide. Customer business priorities

strongly guide which capabilities customer firm seek to

posses as source of competitive advantage, and they also

provide a progressive basis of segmentation themselves.

To conclude, it can be understood that, today, many business

automobile market mangers in India are finding that the

focus of parameter of segmentation no longer have the

vitality that they once had. Even though they made provide a

useful start, they are not enough to pinpoint groups of

customers with sufficiently similar requirements and

preferences. To gain a more detailed understanding of how

customer requirement and preferences vary, automobile

market managers use more progressive priorities, usage

situation, and customer profitability.

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